Sports Entertainment Acquisition, SPAC with Possible Gaming Ambitions, Upsizes IPO to $400 Million

Posted on: October 2, 2020, 12:52h. 

Last updated on: October 2, 2020, 02:27h.

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

Sports Entertainment Acquisition Corp. (NYSE:SEAH.U), a special purpose acquisition company (SPAC), said today it priced 40 million units at $10 apiece, topping the previously estimated size of its initial public offering (IPO).

SPAC deals
Traders had eight SPAC pricings to choose from today, including a $400 million offering from Sports Entertainment Acquisition Corp. (Image: New York Times)

The Florida-based company is the latest in a growing line of blank-check firms that could enter the entertainment, gaming, and sports industries in a variety of ways. In a filing with the Securities and Exchange Commission (SEC), Sports Entertainment said it will evaluate target firms with exposure to providing services and technology in the athletics and entertainment fields.

Examples of these technology/service areas include media, ticketing, payments processing, entertainment travel, gaming, loyalty programmes and many others,” according to the filing.

Thanks in large part to the success of DraftKings (NASDAQ:DKNG) stock, SPACs are all the rage in the gaming industry this year. However, there are risks for investors with any blank-check company, including the possibility that a deal will fall apart or not be reached at all. The latter scenario is relevant because if a special purpose vehicle can’t find a company to acquire within two years, it must liquidate.

Outlook for Sports Entertainment

Sports Entertainment Acquisition has the pedigree to affect deals in its desired spaces, including potential gaming or sports betting.

The company was founded by Eric Grubman, a former NFL executive, and John Collins, who has long-running, high-level leisure and hospitality experience. Those resumes don’t guarantee success, but there is a foundation here for at least identifying viable targets and executing a transaction.

As is the case with so many SPACs this year, there’s clear enthusiasm for Sports Entertainment. The company originally told investors it was looking to raise $350 million via its IPO, but that figure came in at $400 million. That figure could increase because underwriters have a 45-day window in which they can buy another six million units.

Underscoring the fevered pitch at which blank-check firms are coming to market this year, Sports Entertainment was one of eight that priced offerings today for a combined $3.25 billion, according to Spacdata.

“In the third quarter, a record-breaking 83 SPACs raised $30.6 billion, the latest in a growing list of milestones for the increasingly popular IPO alternative,” according to Renaissance Capital.

Gaming Getting Busy with SPACs

What comes of Sports Entertainment’s possible gaming ambitions remains to be seen. But there’s no denying there’s ample desire for the combination of blank-check and gaming companies.

Besides DraftKings, which has been public since April, there are at least three other pending SPAC transactions in the gaming industry that will result in new arrivals of equities tied to iGaming, social gaming, and sports wagering.

For Sports Entertainment, the good news is that should it choose to pursue deals in those areas, there are plenty of companies looking to go public as soon as possible. That’s because of the lofty valuations markets are currently assigning to next generation gaming firms.