Rumoured DraftKings sell-off could pave way for IPO

DraftKings’ rumoured sale to Diamond Eagle Acquisition Corp could see the operator go public without an IPO, according to Julian Buhagiar, the co-founder of London advisory firm RB Capital.

Bloomberg reported this morning that the operator was in advanced talks with Diamond Eagle, a special-purpose acquisition company (SPAC), as a way for DraftKings to secure new funds for its US expansion.

“SPACs are not dissimilar to private equity, with the notable exception that they can resort to much deeper revenue streams to acquire businesses, and in theory this means SPACs can buy the entire business and publicly float it on the stock exchange without the need an initial public offering (IPO),” Buhagiar told EGR.

Buhagiar said the transaction would also facilitate future M&A activity for the operator.

“If there were to be any future mergers or takeovers with any competitive public offering, such transactions can be facilitated with share swaps and/or equity buybacks as the price of both parties will be clearer.

“In such instances a direct bid for shares in the target company will be easier to make.”

If the deal fails to go through DraftKings would likely need to go through another funding round – its 11th such process.

Diamond Eagle raised $400m via IPO in May and was founded by Hollywood exec Jeff Sagansky.

A previous Saganksy SPAC called Platinum Eagle tried to buy FanDuel back in March 2018 as a means to taking the company public without FanDuel having to go through the IPO process.