Landry goes public again.
The Houston-based collection of casual and upscale restaurants, along with Golden Nugget casinos, have agreed to merge with blank check company Fast Acquisition in a deal that will value the company at $6.6 billion. dollars.
Institutional investors agreed to invest $1.2 billion in the company upon closing, the companies said.
Once the transaction closes, Landry’s owner, Tilman Fertitta, will be the company’s majority shareholder and own a 60% stake in a publicly traded Landry’s/Golden Nugget. The companies said they do not expect any changes in management as a result of the deal.
Fertitta said in a statement that the deal was “opportunistic” and will help provide opportunities to make more acquisitions.
“After taking the company private in 2010, we have achieved a lot,” Fertitta said in a statement. “However, in today’s opportunistic world, I have determined that to maximize opportunities in the gaming, entertainment and hospitality industries, it is best to take my company public.”
Fast Acquisition is a special purpose acquisition company, or SPAC, formed by Ruby Tuesday founder Sandy Beall and investor Doug Jacob. It’s a shell company that takes investors’ money and uses it to make an acquisition. During the merger, it takes the name of the company it acquires, thus making this company public. SPACs have been growing in popularity over the past 18 months.
Fast had targeted a fast food chain, but clearly saw an opportunity with Landry’s/Golden Nugget, a massive collection of brand names. Landry’s operates dozens of restaurant brands, including Del Frisco’s, Houlihan’s, McCormick & Schmick’s, Morton’s, Bubba Gump Shrimp Co., and Rainforest Café, among others.
The business has been built over the years through a succession of acquisitions – Fertitta specializes in buying low-cost, often bankrupt restaurant chains and cutting their costs. But it also operates several large, high-volume restaurants in tourist locations.
Fertitta considered an IPO, but ultimately opted for a SPAC merger – there had been concerns about the amount of debt his companies had incurred over the years to complete their deals.
But Fertitta also said the Fast deal could be done faster than a typical IPO. “After comparing the opportunities offered by a transaction with Fast, versus the traditional IPO route, it became very clear that we could access the capital markets with more certainty and speed if we were to conclude an agreement. with Fast,” he said.
According to the announcement, Landry’s locations averaged $5.7 million in sales per restaurant and $1 million in earnings before interest, taxes, depreciation and amortization per location.
The companies said funds from the $1.2 billion investment will be used to pay down debt and for general corporate purposes. The transaction is expected to close in the second quarter.
“The hospitality industry is experiencing the biggest disruption of our lifetime and Tilman and his team have remained the nation’s leading gaming and restaurant operators,” Jacob said. “We believe this diverse portfolio of full-service dining and entertainment concepts combined with pent-up consumer demand will enjoy continued success as a public company.”
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