DraftKings invokes double De-SPAC energy

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Security services provider Kastle Systems is in talks to go public through a special purpose acquisition company started by Simon Property Group Inc. (SPGS: $9.72), according to a person with knowledge of the matter.

Kastle, backed by veteran SPAC investor Mark Ein’s Venturehouse Group, is discussing a business combination with Simon Property Group Acquisition Holdings Inc., the person said, asking not to be identified discussing private information. A deal hasn’t been reached and the terms could change or talks could end without an agreement, the person said.

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Kastle Systems, based in Falls Church, Virginia, provides the operating system for property management functions such as visitor passes, video surveillance and identity assurance. Its clients include companies such as GrubHub Inc. and Gensler, as well as CBRE Group Inc., AvalonBay Communities Inc. and Cushman & Wakefield Plc, according to its website.

The wild spate of mergers and acquistions in the gambling industry continued Monday as DraftKings (DKNG: $52.36 +1.5%) agreed to acquire Golden Nugget Online Gaming (GNOG: $18.50, +50.8%) for $1.56 billion in stock.

Golden Nugget Online shareholders will receive 0.365 shares of DraftKings stock, which puts the offer at a 53% premium to Golden Nugget Online shares’ closing price on Friday.

Golden Nugget Online shares surged nearly 48% on the news, while DraftKings stock remained relatively flat after the deal’s announcement. DraftKings has a market cap of $20.68 billion.

Golden Nugget Online CEO Tilman Fertitta owns 47% of the business, which was formed by spinning off the sports gaming and iGaming operations of the Golden Nugget. The billionaire said he will continue to hold on to the stock of the new company for at least a year after the deal closes. Fertitta will also join the DraftKings board.

The deal gives DraftKings access to Golden Nugget Online’s 5 million customers, who are dependable online casino players. The gaming industry anticipates customers who bet in online casino games will be critical to its future revenue growth. Fertitta, and others, have said iGaming customers are worth seven times the value of a sports betting customer.

On DraftKings second-quarter earnings conference call, CEO Jason Robins said iGaming provides an opportunity to diversify the company’s offering beyond sports seasons. However, it has struggled to win customers to its casino play platform.

“We definitely feel in the iGaming segment that we do better with people who are sports fans, that we can cross-sell, and we’ve been working hard to try to extend our brand and extend our reach into the non-sports fan iGaming audience,” Robins said.

DraftKings anticipates $300 million in cost savings from the deal, as it brings platform and technology in house, cuts fees to third-party providers and lowers marketing costs. The company will be able to get promotional and marketing consideration with Fertitta’s Houston Rockets, Landry’s restaurants and Golden Nugget brick-and-mortar casinos.

Shared office space giant WeWork and Cushman & Wakefield PLC, one of the world’s largest commercial real-estate firms, are negotiating to form a $150 million partnership to navigate the new world of remote working and flexible workplaces.

As part of the alliance, Cushman would make a $150 million investment in the planned merger between WeWork and a public company [BowX Acquisition Corp. (BOWX: $9.98)] later this year. That merger, expected to value WeWork at $9 billion including debt, will cap off the firm’s effort to reconstruct its balance sheet following the high-profile collapse of its planned initial public offering in late 2019.

The deal with Cushman comes as office-building owners and tenants are struggling to plan for returning tens of millions of employees to downtowns and suburban office parks after some 18 months of working from home. Many thought that Labor Day would be a major turning point. But concerns about vaccination rates and variants of the Covid-19 virus have forced many companies to delay their plans. 

WeWork and Cushman executives feel that by teaming up, they can offer office-building tenants and landlords help in reshaping the office-building industry while addressing increasing pressure from employees for more flexible work arrangements. Already, some of the biggest American corporations have announced plans to allow some form of remote working for the indefinite future.

Two weeks after its dubious earnings debut as a public company following a merger with a blank-check firm, ATI Physical Therapy Inc. (ATIP: $4.57) is replacing its chief executive officer.

ATI, which operates about 900 physical therapy clinics across 25 U.S. states, said in a statement Monday that Labeed Diab stepped down as CEO and board member, effective immediately. John Larsen, on the board since 2018, was named executive chairman and will help lead the company as it searches for its next chief executive.

ATI’s first public earnings report last month shocked analysts with larger-than-expected staff turnover and revenue projections that were revised sharply lower. Its shares plunged 54% over the span of two days, ranking it among the worst-performing firms to have gone public via a special purpose acquisition company, according to data compiled by Bloomberg. Law firms across the U.S. published press releases urging investors who had lost money to contact them for securities-fraud investigations.

“The Board has determined that it is the right time for a leadership change,” Larsen said in the statement, which added that the transition doesn’t affect the company’s 2021 earnings forecast announced last month. “We remain confident in the strength of the ATI brand, our market position and the long-term tailwinds driving demand for our services.”

ATI shares fell to as low as $2.81 on July 30. They were up 0.7% to $4.41 at 9:54 a.m. in New York. Most SPACs raise capital at $10, a price that’s often used as a benchmark.

Private equity firm Advent International owns about 62.9% of ATI. It agreed in February to take the Bolingbrook, Illinois-based rehabilitation services company public through a merger with Fortress Value Acquisition Corp. II, which closed in mid-June.