Affinity Gaming Merging with New SPAC, Seeks More Casino, Leisure Deals

Posted on: January 16, 2021, 05:20h. 

Last updated on: January 17, 2021, 02:04h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Affinity Gaming, the owner of the Silver Sevens Casino in Las Vegas, is merging with a newly formed special purpose acquisition company (SPAC). It plans to pursue addition consolidation opportunities following that marriage.

Affinity SPAC
Silver Sevens Casino in Las Vegas. Owner Affinity Gaming is merging with a SPAC to pursue more deals. (Image: Las Vegas Review-Journal)

In a Form S-1 filing with the Securities and Exchange Commission (SEC) released Friday, Gaming & Hospitality Acquisition Corp. revealed plans for an initial public offering (IPO) raising $150 million to $172.5 million. The new SPAC said in the S-1 its initial business combination will be with Affinity. But the activity won’t end there.

We seek to acquire one or more businesses with assets that are fundamentally sound, yet are underperforming their potential,” according to the S-1. “We will look for opportunities where we can leverage our significant experience and expertise to help one or more businesses achieve long-term strategic and operational excellence.”

As is par for the course with SPAC IPO filings, the Gaming & Hospitality document indicates the blank-check firm hasn’t yet identified a merger partner beyond Affinity. The company says its search for targets won’t be confined by geography, and that it’s focusing on gaming and hospitality assets.

Regional Focus Likely

With regional gaming venues proving sturdy relative to destination market counterparts against the coronavirus backdrop, Gaming & Hospitality could make that a focus of its merger search.

“In particular, we believe there is a robust addressable market in regional and distributed gaming. Regional gaming is a logical market, given the potential synergies with the Affinity Gaming platform,” according to the SEC filing.

In addition to Silver Sevens, Affinity owns Buffalo Bill’s, Rail City Casino, and Primm Valley Resort & Casino in Nevada. It also owns the Lakeside Hotel Casino in Iowa and the Mark Twain Casino and St. Jo Frontier Casino in Missouri.

The blank-check outfit also notes deals in the distributed gaming, gaming equipment, online casinos, and sports betting industries are possible. Gaming & Hospitality sees a favorable environment for consolidation, owing to the coronavirus pandemic.

“The market dislocation resulting from the COVID-19 pandemic, together with a fragmented market with few consolidators, will provide a broad range of acquisition opportunities,” the SPAC said in the S-1.

No Stopping SPAC Fever

After taking the investment community by storm last year, blank-check companies are extending that momentum in 2021. The gaming industry remains hospitable territory for confirmed deals and SPAC speculation.

To this point in the new year, four SPAC mergers closed across various industries, according to SPAC Track data. As of Jan. 9, there were 27 blank-check IPOs that raised a combined $6.6 billion. That offering number is likely approaching 40 or more today.

In addition to its Nevada, Iowa, and Missouri permits, Affinity has a license to operate in Florida, and previously held licenses in eight states, including Colorado, New Jersey, Pennsylvania, Ohio, Mississippi, Indiana, Louisiana, and Arizona.

“Potential target companies who are licensed will likely view our existing and previous licensure favorably when seeking to transact, as it likely reduces transaction execution risk,” according to the S-1.