Capital Calls: Wynn bets too much on SPAC

GAN

11/05/2021 06:46

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    NEW YORK, May 11 (Reuters Breakingviews) - Concise insights
on global finance.
 
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TWO OF A KIND. If the house always wins in both casinos and
special-purpose acquisition companies, then Wynn Resorts
 WYNN.O  should be sitting pretty. The $15 billion company plans
to merge its online gambling unit with Austerlitz Acquisition
Corporation I  AUS.N . Separating the digital assets will reap
fees and shares for the SPAC’s architects, and in theory lead to
a richer valuation for Wynn’s fledgling internet business.
DraftKings  DKNG.O  and gaming software provider Gan  GAN.O  are
each valued at around 20 times historical sales, while Wynn
fetches less than 7 times.
    Wynn shareholders are placing a big bet. Their stake in the
interactive business will shrink from 71% to 58%, or less as
warrants allow for additional dilution later. Although digital
wagers are growing fast  urn:newsml:reuters.com:*:nL4N2IW0XC, controlling as much as 15%
of what Wynn Interactive reckons will be a $45 billion total
addressable market sounds ambitious. If it can win that much of
the pot, though, Wynn Resorts may not be playing its online
cards right. (By Katrina Hamlin)
    On Twitter http://twitter.com/breakingviews
    
    Earlier in Capital Calls:
    
    Sabers down for Project JEDI  urn:newsml:reuters.com:*:nL1N2MX1TS
    Italy dynasty coughs up for road buyout  urn:newsml:reuters.com:*:nL8N2MX4SC 
    French music IPO hits a minor key  urn:newsml:reuters.com:*:nL4N2MX3JB
    Fintech will have to do trustbusters’ job on banks
 urn:newsml:reuters.com:*:nL4N2MX2GU
    Chinese e-insurance IPO warns Wall Street  urn:newsml:reuters.com:*:nL4N2MX0SG
   

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| Editing by Jeffrey Goldfarb and Katrina Hamlin)