Breakingviews: Tilman Fertitta takes liberty with SPAC menu

If a special purpose acquisition company is serving up any kind of deal, Tilman Fertitta is ordering. The owner of the Houston Rockets basketball team is selling Fertitta Entertainment, his casino and steak company, to Fast Acquisition, a blank-check firm managed by the founder of now-bankrupt restaurant chain Ruby Tuesday, for some $6.6 billion including debt. Fertitta is working his way through the menu of everything SPACs have to offer.

The current deal with Fast values his five Golden Nugget casinos and 446 full-service restaurants at an enterprise value of around $6 billion. That’s roughly twice the revenue these properties gleaned in 2019, before Covid-19 took a big swipe at restaurants and in-person gambling. It’s a reasonable-looking blend of where casino company Penn National Gaming and restaurant chain Brinker International, owner of Chili’s, trade.

And that’s before including the fast-growing Golden Nugget Online Gaming unit that Fertitta hived off to a SPAC he managed, Landcadia Holdings II, in a deal that closed in December. Fertitta Entertainment kept a controlling equity stake now worth around $600 million. Separately Fertitta’s third SPAC, Landcadia Holdings III, announced a deal last week to acquire Ohio-based Hillman.

Then there is Fertitta’s first SPAC, the original Landcadia Holdings, which bought online food-delivery outfit Waitr in 2018. Fertitta is among the people and companies named in a lawsuit for misleading investors about expectations for the business. At the time that deal was announced, Waitr was expecting revenue of roughly $130 million in 2019. That’s a figure the company exceeded, but its stock price has slumped to barely more than a third of the share value at the time.

The online gaming company’s stock has done much better. For shareholders in the SPACs, it’s a mixed bag. For his part, Fertitta has tried being a SPAC buyer, a buyer and seller in the same transaction, and now a seller. Investors shouldn’t assume they can follow along. Like other tycoons – John Malone, Barry Diller and Rupert Murdoch, for instance – Fertitta is re-engineering his private and public investments to his advantage.

______________________________________________________________________________________

BREAKINGVIEWS

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.