SPAC Deep Dive, subSPAC

subSPAC

SPAC Deep Dive

Each week we’ll identify and break down for you SPACs that are capturing market share and making an impact.

Equity Bottom-Up

<ul><li>Fantasy Sportbook Operator DraftKings saw its shares drop by 28% at the close on Friday, recording the worst in its trading history even as its management and CEO remained upbeat about the company's future.</li><li>What was surprising about the steep decline was the fact that the company beat analyst expectations both on the revenue and EPS front in its most recent quarter while also raising its full-year guidance.</li><li>The market remains skeptical about the company's business model and its decision to prioritize growth over profitability, a stark comparison to its peers who have cut costs in recent months.</li></ul>

Fantasy Sportbook Operator DraftKings saw its shares drop by 28% at the close on Friday, recording the worst in its trading history even as its management and CEO remained upbeat about the company's future.What was surprising about the steep decline was the fact that the company beat analyst expectations both on the revenue and EPS front in its most recent quarter while also raising its full-year guidance.The market remains skeptical about the company's business model and its decision to prioritize growth over profitability, a stark comparison to its peers who have cut costs in recent months.

Equity Capital Markets

Sports Entertainment Acquisition / Equity Capital Markets

Sports Entertainment Acquisition (SEAH US)

<ul>
<li>The rapid legalization of online gaming across the United States has resulted in a severely fragmented industry</li>
<li>Super Group, which largely operates in Europe, is set to debut soon through a SPAC merger with Sports Entertainment Acquisition Corp (SEAH), at a valuation of $5.14 billion</li>
<li>For those unfamiliar, Super Group operates online sports betting and gaming under the Betway and Spin brands</li>
</ul>


The rapid legalization of online gaming across the United States has resulted in a severely fragmented industry
Super Group, which largely operates in Europe, is set to debut soon through a SPAC merger with Sports Entertainment Acquisition Corp (SEAH), at a valuation of $5.14 billion
For those unfamiliar, Super Group operates online sports betting and gaming under the Betway and Spin brands


Can Super Group take the Crown from DraftKings?

Independent Research, SPACs, SPAC Track

SPAC Track

Independent Research, SPACs

Alpha Capital Acquisition Co / Equity Capital Markets

<ul><li>Alpha Capital Acquisition Co (<em><strong>ASPC: warrants +23.38%</strong></em>) &amp; <strong>Semantix </strong>(Valuation: $693M EV)</li><li>FaZe Clan <a href="https://venturebeat.com/2021/11/17/faze-clan-cuts-a-sports-betting-partnership-with-draftkings/" target="_blank" rel="noopener">cuts a sports betting partnership</a> with DraftKings</li><li><strong>Virtuoso Acquisition Corp. <em>(VOSO) </em><a href="https://www.businesswire.com/news/home/20211117005743/en/Virtuoso-Acquisition-Corp.-Stockholders-Approve-Proposed-Merger-With-WejoVirtuoso" target="_blank" rel="noopener">shareholders approved</a> its merger with Wejo</strong></li></ul>

Alpha Capital Acquisition Co (ASPC: warrants +23.38%) &amp; Semantix (Valuation: $693M EV)FaZe Clan cuts a sports betting partnership with DraftKingsVirtuoso Acquisition Corp. (VOSO) shareholders approved its merger with Wejo

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<p><a href="https://www.smartkarma.com/entities/entain-plc" target="_blank" data-smartkarma-citation="entities:23926:1" rel="noopener">Entain (ENT LN)</a> confirmed that it had received a proposal from <a href="https://www.smartkarma.com/entities/draftkings-inc" target="_blank" data-smartkarma-citation="entities:29248:1" rel="noopener">DraftKings Inc (DKNG US)</a>. On 22 September, the Board said that following an earlier approach at 2,500p/share (mix of DraftKings shares and cash) which was rejected, a further proposal was received on 19 September 2021. DraftKings Inc. revised the offer price to <strong>2,800p/share</strong> (630p in cash and and the balance payable in new DraftKings Class A common shares).</p>
<p>The acquisition of Entain could be strategic for DraftKings, which is eyeing international expansion. The consideration represents a premium of 46.2% to Entain’s closing share price on 20 September 2021, 4.5x EV/NTM Sales, <strong>19.2x EV/NTM EBITDA</strong> and 39.2x Fwd P/E (source: Capital IQ consensus).</p>
<p><strong>PUSU deadline</strong> is <strong>19 October</strong>.</p>
<p>There is some interloper risk. In case DraftKings presents a firm offer, <strong>MGM could potentially bid again for Entain</strong>. Nevertheless, MGM in the past has said that its joint-venture agreement with Entain gives it protection against another entity trying to acquire Entain without its approval.</p>
<div>
<p>Moreover, the gambling business is ideal private equity territory. Betting businesses are cash cows and the revenue flows can be (or should be) precisely predicted. The lower cost of capital of private equity firms and the financial discipline introduced are a key advantage in the industry.</p>
</div>
<p><strong>BetMGM</strong> (Entain’s joint venture in the US with MGM Resorts) <strong>continues to perform strongly</strong>. H1 NGR of $357m. Number two operator for sports-betting and iGaming across the US with 22% market share, number one operator in iGaming, extending leadership with 30% market share. Total combined investment in BetMGM by joint venture partners expected to be $660m by the end of 2021.</p>
<p><strong>Valuation of Entain</strong>. By using the median of comparables <strong>11.9x EV/Fwd EBITDA</strong>, the implied valuation of Entain would be 1,628p/share. To value BetMGM, I expect total revenue of $3.6 bn by 2025. By applying a 3.0x EV/Fwd Revenue multiple, the valuation of the JV could reach $10.8 bn, of which $5.4 bn for Entain (equivalent to <span title="Share Price as of Dec-31-2020 FY: 2020 Period End Date: Jun-30-2020 Period Type: LTM Value: £ 11.34, Currency: GBP">£</span>3,933 mn, or 672p per share).</p>
<p>Adding the base case plus BetMGM, my longer term <strong>TP</strong> is <strong>2,300p</strong>. The shares seem to be fairly valued at market close of 23 September, nevertheless two takeover attempts in nine months mean a lot of interest in Entain. I would therefore be <strong>LONG</strong>.</p>

Entain (ENT LN) confirmed that it had received a proposal from DraftKings Inc (DKNG US). On 22 September, the Board said that following an earlier approach at 2,500p/share (mix of DraftKings shares and cash) which was rejected, a further proposal was received on 19 September 2021. DraftKings Inc. revised the offer price to 2,800p/share (630p in cash and and the balance payable in new DraftKings Class A common shares).
The acquisition of Entain could be strategic for DraftKings, which is eyeing international expansion. The consideration represents a premium of 46.2% to Entain’s closing share price on 20 September 2021, 4.5x EV/NTM Sales, 19.2x EV/NTM EBITDA and 39.2x Fwd P/E (source: Capital IQ consensus).
PUSU deadline is 19 October.
There is some interloper risk. In case DraftKings presents a firm offer, MGM could potentially bid again for Entain. Nevertheless, MGM in the past has said that its joint-venture agreement with Entain gives it protection against another entity trying to acquire Entain without its approval.

Moreover, the gambling business is ideal private equity territory. Betting businesses are cash cows and the revenue flows can be (or should be) precisely predicted. The lower cost of capital of private equity firms and the financial discipline introduced are a key advantage in the industry.

BetMGM (Entain’s joint venture in the US with MGM Resorts) continues to perform strongly. H1 NGR of $357m. Number two operator for sports-betting and iGaming across the US with 22% market share, number one operator in iGaming, extending leadership with 30% market share. Total combined investment in BetMGM by joint venture partners expected to be $660m by the end of 2021.
Valuation of Entain. By using the median of comparables 11.9x EV/Fwd EBITDA, the implied valuation of Entain would be 1,628p/share. To value BetMGM, I expect total revenue of $3.6 bn by 2025. By applying a 3.0x EV/Fwd Revenue multiple, the valuation of the JV could reach $10.8 bn, of which $5.4 bn for Entain (equivalent to £3,933 mn, or 672p per share).
Adding the base case plus BetMGM, my longer term TP is 2,300p. The shares seem to be fairly valued at market close of 23 September, nevertheless two takeover attempts in nine months mean a lot of interest in Entain. I would therefore be LONG.

DraftKings/Entain: Cash and Shares Approach

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

<div id="x_divRplyFwdMsg"><div>NCSoft (036570 KS) has been hammered as brokers downgrade on the poor reception to their new game,  Blade &amp; Soul 2, is far below anticipated in terms of both user feedback and use.  </div></div><div>
<div>The worry here is that now all the eggs are in one basket again (Lineage) as dependency on one game and failure to diversify is a big concern. </div>
<div></div>
<div>When Lineage 2M launched Nov 27th 2019 stock was down 7% on disappointing numbers vs. St estimates and the current fall in Apple AppStore ranking was based on the first 4-5 hrs mind you the Google App user score is 2 out of 5 stars which is concerning.</div>
</div>

NCSoft (036570 KS) has been hammered as brokers downgrade on the poor reception to their new game,  Blade &amp; Soul 2, is far below anticipated in terms of both user feedback and use.  
The worry here is that now all the eggs are in one basket again (Lineage) as dependency on one game and failure to diversify is a big concern. 

When Lineage 2M launched Nov 27th 2019 stock was down 7% on disappointing numbers vs. St estimates and the current fall in Apple AppStore ranking was based on the first 4-5 hrs mind you the Google App user score is 2 out of 5 stars which is concerning.


United States

DraftKings Inc. operates as a daily fantasy sports contest and sports betting company. The Company allows users to enter daily and weekly fantasy sports-related contests and win money based on individual player performances in American sports. DraftKings serves customers in the United States.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

DraftKings (DKNG US)

King No More

To its credit, DraftKings continues to benefit from the expanded legalization of gaming across the US and the lower customer acquisition costs in...

subSPAC

Can Super Group take the Crown from DraftKings?

Welcome to The Rundown! Each week we’ll identify and break down for you SPACs that are capturing market share and making an impact.Happy Sunday...

subSPAC

The Nightcap from SPAC Track

Alpha Capital Acquisition Co (ASPC: warrants +23.38%) & Semantix (Valuation: $693M EV) FaZe Clan cuts a sports betting partnership with...

SPAC Track

DraftKings/Entain: Cash and Shares Approach

The shares seem to be fairly valued at market close of 23 September, nevertheless two takeover attempts in nine months mean a lot of interest in...

Jesus Rodriguez Aguilar

Is NCSoft Permanently Broken?

Is Ncsoft permanently broken? stock is down 40% from high and either everyone is tossing in the towel or they are not getting any recognition for...

Ken S. Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)