Genius Sports Merging with SPAC dMY Technology in $1.5 Billion Deal

Posted on: October 27, 2020, 10:31h. 

Last updated on: October 27, 2020, 01:06h.

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

Sports betting data provider Genius Sports said today it will merge with special purpose acquisition company (SPAC) dMY Technology Group, Inc. II (NYSE:DMYD). It’s a transaction that values the analytics firm at $1.5 billion and will pave the way for it to go public.

Genius Sports
Genius Sports CEO Mark Locke is about to be the leader of a public company. (Image: Yahoo Sports)

SPACs raise funds of their own via an initial public offering (IPO) and then shop for a merger partner that’s looking to rapidly go public, using the IPO proceeds to acquire the target company. SPACs are also known as blank-check firms.

“DMY Technology Group II went public in August, raising $240 million from its IPO and listing its shares on the New York Stock Exchange,” reports the Wall Street Journal. “As part of the deal with Genius Sports, a group of other institutional and industry investors will take an additional $330 million stake in the company.”

With a client roster that includes the NBA and NCAA and integrity deals with the PGA and European golf tours, Genius Sports makes for an alluring SPAC target at a time when sports betting is expanding in the US. More growth could be on the way as several states could legalize the activity on Election Day.

The transaction values NewCo (the combined entity) at an anticipated initial enterprise value of approximately $1.5 billion, or 8.0x GSG’s currently projected 2021 revenue of $190 million” according to the companies.

The new entity will have $150 million in cash and no debt.

Combination Makes Sense

The possible marriage of Genius and dMY Technology II because the SPAC’s leaders, Niccolo de Masi and Harry You, are also board members at Genius. Assuming a deal is imminently reached between the two sides, the sports betting data provided could be a public company by the end of the first quarter of 2021.

A dMY/Genius Sports combination would also mark the latest in a flurry of activity this year involving blank-check entities and gaming companies. It’s a trend that started with DraftKings (NASDAQ:DKNG) going public in late April following a reverse merger with a SPAC known as Diamond Eagle Acquisition Corp.

Since then, a slew of blank-check companies have gone public, declaring intentions to shop for gaming assets, usually in the iGaming, social gaming, and sports betting arenas. Likewise, there are several previously announced transactions between SPACs and gaming entities that are waiting to be finalized.

SPACs typically have two years from the time of their IPO to find a merger partner or risk liquidation.

Sequel Worth Watching

Not all sequels are worth tuning in to, be it cinema or financial markets. But dMY Technology II is proving otherwise.

The blank-check firm is the follow-up to dMY Technology Group Inc. (NYSE:DMYT), the SPAC that’s serving as the vehicle for Rush Street Interactive, the online casino business of Rush Street Gaming, to go public. That $1.8 billion deal was announced in late July.

Not only does that underscore the brisk pace of SPAC/gaming deals, but it highlights the ability of Masi and You to find willing partners for their newly formed blank-check firms.

The Genius/dMY II combination would be the largest involving a European company and a US-based SPAC, according to the Journal.