FST Stock Price Increases Over 19%: Why It Happened

By Amit Chowdhry ● Jul 1, 2021
  • The stock price of Fast Acquisition Corp (NYSE: FST) increased by over 19% during intraday trading. This is why it happened.

The stock price of Fast Acquisition Corp (NYSE: FST) increased by over 19% during intraday trading.  Investors are responding to Fertitta Entertainment – the parent company of Golden Nugget/Landry’s, a leader in the gaming, restaurant, hospitality, and entertainment industry, and FAST Acquisition Corp. (NYSE: FST), a special purpose acquisition company (SPAC) co-headed by Doug Jacob and Sandy Beall – announcing that they have entered into an amendment to their previously announced Agreement and Plan of Merger entered into between the parties on February 1, 2021. 

According to the amendment, Fertitta Entertainment agreed to contribute certain operating businesses not originally included as part of the business combination with FAST for no additional debt. And businesses that will now be contributed to the public company include the Mastro’s brand, the Aquariums, the Pleasure Pier, Vic and Anthony’s, and a handful of smaller restaurant concepts, adding a total of 42 incremental, high-quality business assets. 

And Fertitta Entertainment will enter into a transaction to acquire the Catch restaurants, including Catch Steak, which restaurant group is already 50% owned indirectly by Tilman J. Fertitta. And in connection with the amendment, Fertitta, the company’s owner, will receive additional equity in the NYSE public company – which will increase his total equity stake post-closing of the transaction to approximately 72%.

Pro forma for the revised transaction, Fertitta Entertainment will be one of the largest publicly-traded hospitality companies with 5 land-based casinos and substantial ownership of Golden Nugget Online Gaming, and over 500 restaurants, amusements, hotels, entertainment venues and other business units across 38 states, the District of Columbia, Puerto Rico, Hong Kong, mainland China, Mexico and Singapore, plus numerous licensed restaurants throughout the world.

In addition, Fertitta Entertainment announced preliminary pro forma financial results for the quarter ended June 30, 2021. Including the additional assets and business units, pro forma net revenues for the three-month period are expected to be between $917 million and $920 million with pro forma adjusted EBITDA estimated to be between $270 million and $275 million. 

For the full year 2021, Fertitta Entertainment believes that its pro forma adjusted EBITDA will exceed $800 million assuming the contribution or acquisition of all of the operating businesses by the company was completed as of January 1, 2021. 

The amended transaction implies an enterprise valuation for Golden Nugget/Landry’s of about $8.6 billion. And this enterprise value includes the value of the GNOG equity to be contributed to the company based on an assumed per share trading price of approximately $13 for GNOG shares – which will be subject to adjustment based on the 60 day average price of the stock before closing. 

The estimated cash proceeds from the transaction are expected to consist of FAST’s $200 million of cash in trust, assuming no redemptions. In addition, shareholders have committed to invest approximately $1.24 billion in the form of a PIPE at a price of $10.00 per share of common stock of FAST immediately prior to the closing of the transaction.

And Fertitta Entertainment expects to use the proceeds from the transaction to accelerate the company’s growth initiatives, general corporate purposes and reduce existing debt. In connection with the merger, the parties will undertake certain reorganizational transactions to exclude from the public company certain businesses and assets that Tilman J. Fertitta will continue to wholly own on a private basis.

The boards of directors of each of FAST and Fertitta have unanimously approved the amended transaction. And the amended transaction will require the approval of the stockholders of FAST and is subject to other customary closing conditions, including the receipt of certain regulatory and gaming approvals. 

The SEC review process is expected to happen around the third week in July, and the transaction is now expected to close in the fourth quarter of 2021.

KEY QUOTES:

“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. Since the rollout of covid vaccinations, the operating results of the incremental 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. We were a great company before and now even better today.”

— Tilman J. Fertitta

“The addition of Mastro’s and the destination entertainment businesses provide tremendous cash flow and growth opportunities to the company and we are excited that Tilman is contributing the new assets to the company. These brands create an even stronger portfolio to leverage for potential future acquisitions.”

— Doug Jacob

“We believe the new assets provide tremendous value to the public company and greatly strengthen the balance sheet for future growth.”

— Sandy Beall

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.