Golden Nugget Parent, Private-Jet Operator Wheels Up Join SPAC Frenzy

“After I compared the opportunities provided by a transaction with Fast, versus the traditional IPO route, it became abundantly clear that we could access the capital markets with more certainty and speed if we did a deal with Fast,” said Tilman Fertitta, the sole owner of Fertitta Entertainment.

Also known as blank-check companies, SPACs raise money before they develop a business. They use the proceeds to make an acquisition, usually within a couple of years, that converts the target into a public company.

Fertitta Entertainment’s deal with Fast will include only the majority of assets and businesses that comprise Golden Nugget LLC and Landry’s LLC—-together valued at about $6.6 billion, including debt—and roughly 31 million shares, or nearly half of the shares outstanding, in the online-casino platform Golden Nugget Online Gaming Inc. GNOG 7.25% The digital-gambling division also went public through a SPAC deal struck in 2020.

Mr. Fertitta, who will continue leading Golden Nugget and Landry’s and hold a roughly 60% interest in the company, said the company began exploring an initial public offering in 2019 as it saw opportunities in mergers and acquisitions but stepped back due to the Covid-19 pandemic.

The entity to be taken public includes five Golden Nugget-branded land-based casinos in the U.S. Landry’s portfolio of fine-dining, upscale and casual-dining restaurants includes Del Frisco’s Double Eagle Steakhouse, Landry’s Seafood House and Bubba Gump Shrimp Co. The companies said they see a post-pandemic growth opportunity, especially with the accelerated legalization of online and land-based gambling. They also see less competition because of restaurant closings during the pandemic and potential acquisition opportunities amid financial distress caused by pandemic-driven closures.

Wheels Up is combining with Aspirational Consumer Lifestyle Corp. ASPL 5.79% in a deal that gives Wheels Up an enterprise value of $2.1 billion. The company said it flew more than 150,000 passengers on private flights with more than 1,500 aircraft in 2020, at a time when commercial flights and travel at large were battered by Covid-19 government restrictions. Wheels Up expects to post $690 million in 2020 revenue, up from $385 million in 2019. Delta Air Lines Inc. has a 25% stake in Wheels Up after combining its private-jet unit with the firm last year.

Wheels Up’s transaction, which includes a $550 million private investment from institutional investors, could deliver up to $790 million in gross proceeds, Wheels Up and Aspirational Consumer Lifestyle said. Institutional investors have committed to invest about $1.2 billion at the closing of Fertitta Entertainment and Fast’s deal, the companies said. Both SPAC transactions are expected to close in the second quarter.

SPACs are a new force invading Wall Street, and they have also seen big swings powered by day traders looking for speculative trades. They are putting money into what amounts to pools of cash to be used to eventually complete a deal, despite the risks, underscoring how online investing platforms and social-media groups now send individuals flocking to new corners of markets.

Upstart companies that go public via SPACs often tout their growth expectations—a practice that is constrained in the traditional IPO process. The difference stems from a liability shield that Congress gave to public companies but didn’t apply to firms doing IPOs. The result: Startups going public through SPACs can make rosy projections about future results with less risk of facing lawsuits than they would if disclosing those figures in a traditional IPO.

Write to Dave Sebastian at [email protected]