A full guide to Fertitta Entertainment and its SPAC
Oliver Brett August 13, 2021 8:28 AM
The restaurant and casino group owned by Houston billionaire Tilman Fertitta is set to return to the public markets as it prepares for a float through a reverse-merger with a special purpose acquisition company. Here’s what you need to know about the Fertitta SPAC.
When will Fertitta go public?
Fertitta will go public in October 2021 at the earliest. According to an amendment to the merger agreement with FAST Acquisition Corp, in which additional assets were added to the SPAC arrangement, the transaction is now expected to close in the fourth quarter of 2021.
This will follow the usual regulatory checks by the US Securities and Exchange Commission.
The float was first proposed in February 2021, at which point the SPAC merger was intended to involve just Golden Nugget casinos plus the restaurant chains Landry’s, Del Frisco’s and Morton’s.
But in an expanded agreement tabled on June 30, 2021, it emerged three more restaurant chains were being added. Those chains are the steakhouse group Vic and Anthony’s plus two others, Catch and Mastro’s, which both offer steak and seafood.
The Galveston, Texas attraction Pleasure Pier, an amusement park perched on top of the Gulf of Mexico, is also part of the deal. In all, 42 extra business assets have been added.
How much is Fertitta worth?
The expanded SPAC deal implies an enterprise value of $8.6 billion for Fertitta Entertainment, an extra $2 billion on top of the February valuation which involved the smaller group of brands.
FAST Acquisition Corp says the additional businesses are being contributed by Fertitta for no additional debt.
What does Fertitta Entertainment do?
As outlined above, Fertitta Entertainment is involved in the hospitality industry, with a heavy emphasis on restaurants and casinos.
It also owns some luxury hotels, such as The Post Oak Hotel in Houston, Texas, and the seaside location Kemah Boardwalk, 20 miles south of Houston. This venue has restaurants, retail outlets, rides, amusements and a boutique hotel of its own.
How does Fertitta Entertainment make money?
Fertitta Entertainment makes money mainly through retail customer footfall and spend across its various restaurants, hotels, casinos and seafront attractions. It has suffered considerably during the pandemic.
A mobile betting segment, Golden Nugget Online Gaming (GNOG) went public in 2020, also through a SPAC. Fertitta Entertainment still owns around half the outstanding shares of GNOG, worth roughly $700m.
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What is Fertitta Entertainment’s business strategy?
As the United States emerges from the pandemic, Fertitta Entertainment has its eyes on a “significant acquisition.”
Fertitta said: “Since the rollout of Covid vaccinations, the operating results of the incremental [additional] assets have been so strong, I decided that I should be focused all in on the company as I see opportunities for a significant acquisition that would not otherwise be available to the company without this revised transaction.”
In normal times, approximately three-quarters of Fertitta Entertainment’s revenues — some $3.41bn in 2019, pre-pandemic — is derived from the restaurant industry, which was inevitably severely depleted during coronavirus-imposed shutdowns.
In a positive outcome, profits for the five regional casinos under the Golden Nugget label have fallen less sharply than those at larger global operators such as Wynn and MGM.
The company expects to benefit from the economic recovery as weaker restaurants have shut down during the pandemic.
Fertitta Entertainment has previously enjoyed an outing as a publicly traded entity. That was until Mr Fertitta took his organisation private in 2010.
In 2019, he was keen to seek a merger of Golden Nugget and Landry’s with Caesars Entertainment, but Caesars chose a rival bidder instead.
Is Fertitta Entertainment profitable?
Fertitta Entertainments various trading entities were consistently profitable – until the pandemic hit.
On March 6, 2020, Fertitta told CNC his restaurants were losing an average of $1m per day in sales due to coronavirus fears – and that was before heavy restrictions were imposed.
He said at the time: “That last million in sales is your most profitable sales. It’s just like any business. That’s where your heavy profit is.”
Turning his attention to the future, he said on June 30, 2021: “The contribution of the new business assets greatly improves the company’s operating cash flow, provides better assets for organic growth, and significantly deleverages the company as no incremental debt is being incurred by the company as part of the revised transaction.”
Who owns Fertitta Entertainment?
Fertitta, who also owns basketball team Houston Rockets, will be the chairman, president and chief executive officer of the merged entity. He will own a large majority stake in the region of 72%.
His personal empire also includes ownership of the the Houston Rockets NBA, a position that has earned him entrepreneurial exposure, with his own programme on business network CNBC.
The company also said it expects pro forma net revenue for the quarter ended June 30 to be between $917 million and $920 million, and pro forma adjusted EBITDA estimated between $270 million and $275 million.
Who is on the Fertitta Entertainment board of directors?
- Tilman Fertitta, Chief Executive Office and Chairman
- Michael Chadwick, Director
- Scott Kelly, Director
- Richard Liem, Vice-President and Chief Financial Officer
- Stephen Scheinthal, Vice-President, General Counsel & Secretary
- Michael Stevens, Director
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