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Billionaire Tilman Fertitta's restaurant, entertainment and casino empire isn't going through with its $8.6B deal to take the company public.
Fertitta Entertainment backed out of a merger with special-purpose acquisition company FAST Acquisition that had been planned since February, the Houston Chronicle reported. Fertitta, who bought the NBA's Houston Rockets in 2017 for more than $2B, will pay $33M to back out of the merger, the Chronicle reports.
FAST said in a release that the termination was mutual, but Fertitta Entertainment told FAST that it terminated the agreement after both parties didn't close the deal in time, according to Securities and Exchange Commission documents. FAST, in turn, accused Fertitta Entertainment of a material breach and threatened legal action, as it said Fertitta Entertainment did not deliver financial statements in a timely manner.
"I have a lot of respect for the FAST team and will support them however I can as they continue to search for a merger target,” Fertitta said in a statement. “At the end of the day we ultimately determined that the right decision for my company was to remain private at this time, and I look forward to continuing to grow our business both organically and in-organically."
SPACs, blank check companies created for the purpose of acquiring private companies and taking them public, had a recent surge in popularity because they allow companies to avoid regulatory and investor scrutiny that comes with a traditional initial public offering.
But a national glut of SPACs looking for acquisition targets means some may return money to investors or otherwise take a bad deal. SPACs are normally priced at $10 per unit, but CNBC reported in September that 97% of pre-merger SPACs are trading below that amid low demand. WeWork went public through a SPAC this year, and its stock price was trading for 13% lower than its opening price after markets closed Friday.
Fertitta, whose most prominent companies under Fertitta Entertainment include Landry’s and Golden Nugget Hotel & Casinos, took Golden Nugget Online Gaming public with a similar deal at the end of 2020. That company is still slated to be acquired by DraftKings for $1.56B next year.
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