DraftKings, the Boston sports-betting company, said on Friday that it expects to become a publicly-traded company within weeks ― pushing forward with a complex financing transaction amid the historic plunge in stock markets.
The company is a few weeks from completing a merger with two other companies: the European sports gambling technology firm SBTech, and Diamond Eagle Acquisition Corp, which is a publicly traded firm created to finance such a transaction.
Shareholders in Diamond Eagle are set to vote on the deal April 9. Once the transaction is complete, the combined company will assume the name DraftKings and retain its Boston headquarters.
The sides announced the deal in December, before the economic crisis that has attended the global coronavirus pandemic. Stocks in many sectors have taken big hits in recent weeks, especially in the gambling industry as casinos around the nation have been forced to temporarily close.
But the three companies say they remain confident that there will be investor interest in their combined effort. Though it has given up some recent gains, Diamond Eagle stock has still been trading at a higher price than it was on the day the DraftKings deal was announced.
“While we are focused on ensuring the health and safety of our employees, customers and communities during these extraordinary times, our plan remains for DraftKings to go public in April,” chief executive Jason Robins said in a statement. “Upon close, the DraftKings’ leading and trusted brand, deep focus on customer experience and data science expertise will create a vertically-integrated powerhouse in the gaming industry.”
DraftKings has been bearing some of the effects of the pandemic virus known as COVID-19. Popular sports leagues have suspended their seasons, drastically reducing the number of games that customers can bet on. And some casinos where the company runs in-person sports books are closed.
But the company is counting on the proceeds from the merger to help beef up its products. Sports betting has been hotly competitive, and DraftKings wants to strengthen its position when life returns to normal. It also is developing a business in igames, online gambling offerings that don’t hinge on the results of sporting events.
DraftKings has said the combined firm would be valued at $3.3 billion and have $500 million on hand. It will be a needed infusion for DraftKings, which has been pushing most of its resources into growth. Regulatory documents show the company lost $142.7 million last year ― more than double what it lost in 2018 ― despite a healthy increase in revenue.
Andy Rosen can be reached at email@example.com. Follow him on Twitter @andyrosen.