DraftKings Proposed Deal With Golden Nugget Opens New Customer Base, Signals More Sports Gaming Deals, Oppenheimer Says
2021-08-10 03:31:13 PM ET (MT Newswires)
03:31 PM EDT, 08/10/2021 (MT Newswires) -- DraftKings (DKNG) proposed acquisition of Golden Nugget Online Gaming (GNOG) opens a new customer base and signals more mergers and acquisitions in the sports gaming industry, Oppenheimer said in a note emailed Tuesday.
The investment firm maintained DraftKings outperform rating and $80 price target.
The digital sports and gaming company said Monday that it will acquire Golden Nugget for $1.56 billion in stock to increase its market share and revenue. The deal is expected to close in the first quarter of 2022.
Oppenheimer analysts estimate that DraftKings currently holds around 20% of online gaming in New Jersey and 17% in Michigan and its main customers are young male sports fans. With this acquisition, DraftKings will also acquire Golden Nugget's 10% to 15% customer base in New Jersey and 4% in Michigan, as well as its customers consisting of 50% female and 50% male with an average age of around 50.
DraftKings will see revenue synergies from the transaction through "cross-selling to Golden Nugget's casino first players" and accessing the "5.5 million members in Golden Nugget's 24K Club and the Landry's select club," said Oppenheimer Analyst Jed Kelly.
The transaction between these companies is the biggest gaming deal next to Penn National Gaming's (PENN) proposed acquisition of Score Media and Gaming (SCR) for $2 billion in cash and stock in the last five days.
Oppenheimer expects fuboTV (FUBO) and Rush Street Interactive (RSI) to be its most "two most likely acquisition candidates" following DraftKings.
The analysts expect DraftKings to own a 25% to 30% share in the US legal sports wagering market as the industry could grow to $11.5 billion by 2025 and $15.3 billion by 2028 with more states regulating sports gaming.
I use both Fundamental and Technical Analysis.
Opinions posted by me are just that, my opinion.
Buy/sell any type of financial security is the sole
decision of the individual. Make your own sound
judgement or consult a professional licensed
advisor.
