Billionaire Tilman Fertitta is rumored to be holding discussions with a blank check firm, Fast Acquisition Corp (NYSE: FST), with the intent to secure a merger that would generate an opportunity for Fertitta to take his Golden Nuggets casinos and Landry’s restaurants public.
Fast’s shares, a special purpose acquisition company (SPAC), saw a 19% rise in volume and was trading at 5.6% ($11.05) at 3:48 PM in New York, which was 37 times more than the daily average. This type of spike had only been seen when SPAC announced a new deal, but they have not come out publicly to confirm or deny the possibility of a merger with Fertitta, neither has the folks at Landry’s.
It was earlier reported on Bloomberg that Fast is in negotiations to raise another $1 billion. This would possibly be needed to finance a deal with Fertitta, thereby valuing Golden Nugget and Landry’s restaurants at $7 billion, which will include debt. Upon agreement of a deal, the new company would be controlled by Fertitta. Fast debuted in August, raising $200 million in its initial public offering, which indicates that another capital would need to be pumped in to execute a transaction in the range of $7 billion.
Fertitta took the Houston based company, Landry’s restaurants private in a $1.4 billion leveraged buyout. It was formerly a public enterprise from 1993 to 2010. After which Feritta expanded the business into casinos, with the acquisition of the Golden Nugget. In 2017, Fertitta went into an agreement to purchase the Houston Rockets for $2.2 billion, which added more debt to his empire. The company owns a range of over 600 restaurants across the Chart House, Del Frisco’s Steakhouse, Bubba Gump’s, Mastro’s and Morton’s The Steakhouse, McCormick & Schmick’s etc.
The linkage of Fast and Landry’s adds up, as the SPAC’s co-CEOs, Sandy Beall and Doug Jacob, both have strong ties in the restaurant industry. Jacob used to be an investor in & Pizza, while Beall was formerly the CEO of Ruby Tuesday, and SPAC chairman Kevin Reddy was the chief executive of Noodles & Co.
Landry’s has a portfolio of five Golden Nuggets casinos, with two of them in Southern Nevada and one in Louisiana, Mississipi, and New Jersey. With Fast going public last year, it was their plan to acquire a private fast or fast-casual restaurant chain, and a casino gaming chair was not part of their initial setup. This is probably one of the reasons Fertitta would likely be given control of the company upon the completion of an agreement.
Fast might be the way out
The Texas businessman has over the years grown familiar with SPACs, as he had used his Landcadia Holdings II recently to act as a footstool to take the Golden Nugget Online Gaming (NASDAQ: GNOG) public. He also used a blank-check firm to take his food delivery brand, Waitr Holdings public, in 2018.
An agreement with Fast might seem to be the best move for the Houston Rockets owner to take the Golden Nugget and Landry’s public. There were reports last month that suggested Fertitta was looking to offload a minority stake in the gaming and restaurant chain. However, with the advent of the coronavirus-based lockdowns, the restaurants have been suffering, and with Golden Nugget’s debt of $4 billion, Wall Streets’ bankers have advised against it. $1.4 billion of the Golden Nugget’s debt was a special dividend issued to Fertitta in 2017, which was vital in his purchase of NBA’s Houston Rockets for $2.2 billion.