Blank-check company Diamond Eagle Acquisition Corp. is in advanced talks to buy Boston-based DraftKings Inc., the fantasy sports and gambling company, according to people familiar with the matter.
The special-purpose acquisition company, or SPAC, is in exclusive negotiations with DraftKings, said the people, who asked to not be identified because the matter isn’t public. No transaction has been finalized and talks could fall through, the people said.
DraftKings may also consider raising capital in another funding round if it doesn’t consummate a sale, one of the people said.
Representatives for DraftKings and Diamond Eagle declined to comment.
DraftKings was founded in 2012 and came to define the daily fantasy sports industry along with chief rival Fanduel Inc.
The companies sought to merge in 2016, the idea being that joining forces would allow them to better shoulder their hefty advertising, lobbying and legal costs. They ended the deal in 2017 after opposition from the Federal Trade Commission.
Irish bookmaker Paddy Power Betfair Plc agreed to acquire FanDuel last year. Market watchers pegged that transaction as the first in a potential wave of U.S. betting-company deals, after the Supreme Court struck down the federal law that had banned gaming in most of the country.
SPACs raise money from public investors to pursue an acquisition they haven’t identified yet. Merging with one enables a private company to go public without an initial public offering.
Diamond Eagle is the fifth SPAC set up by Hollywood executive turned serial dealmaker Jeff Sagansky. The former Sony Corp. and CBS executive’s previous SPAC, Platinum Eagle Acquisition Corp., agreed to buy two lodging companies last year. Diamond Eagle raised $400 million in an initial public offering in May.