Merging company

DraftKings commits to PIPE for a SPAC agreement with Vivid Seats

Posted: Oct 14, 2021, 9:06 a.m.

Last updated on: October 14, 2021, 9:15 a.m.

DraftKings (NASDAQ: DKNG) announced today that it will provide a private equity investment (PIPE) to Horizon Acquisition Corp. (NYSE: HZAC) – The Special Purpose Acquisition Company (SPAC) merging with online ticket marketplace Vivid Seats.

DraftKings Vivid seats
SPAC investor Todd Boehly makes Vivid Seats public. The company has secured funding from DraftKings. (Picture: Bloomberg)

Todd Boehly’s Eldridge Industries, a subsidiary of Horizon’s sponsor, Horizon Sponsor, LLC, enters into an agreement with DraftKings. Los Angeles Dodgers co-owner Boehly is the founder of Horizon Acquisition and will serve on the board of directors of Vivid Seats. The exact amount of DraftKings’ PIPE has not been revealed.

The investment will be part of the previously announced PIPE financing for the transaction, with DraftKings assuming part of Eldridge’s commitment, ”according to a statement.

When Horizon and Vivid Seats announced plans to merge in April, the deal was valued at $ 1.95 billion, including $ 769 million in gross proceeds to be paid to the internet ticket broker. Of that $ 769 million, $ 225 million was to be PIPEs from Boehly’s Eldridge Industries and Fidelity. DraftKings recovers part of this tab.

Potentially sweet deal for DraftKings

Thanks to the PIPE commitment, DraftKings obtains an asset that could be appreciated.

“As part of the investment, Eldridge has agreed to provide DraftKings with the option to sell its Vivid Seats shares to Eldridge on the business day following the first anniversary of the closing of the Horizon and Vivid Seats business combination at the price of $ 9.77 per share, subject to DraftKings permanently holding Vivid Seats shares until that date, ”the statement said.

News of DraftKings’ investment pushed SPAC shares up 11.5% by midday to volume already more than triple the daily average. This indicates that, as a slew of de-SPACED companies collapse this year, the DraftKings name has a lot of cache in the investment community.

Vivid Seats’ merger with Horizon Acquisition is expected to be finalized on October 18, with Target debuting as a stand-alone public company the next day. It will be traded on the Nasdaq under the symbol “SEAT”.

Other DraftKings, Horizon Ties

DraftKings co-founder and CEO Jason Robins is an advisor to another Boehly SPAC – Horizon Acquisition Corp. II (NYSE: HZON).

Earlier this year, rumors circulated that the blank check company was about to merge with sports betting data provider Sportradar (NASDAQ: SRAD). But that deal fell apart, prompting Sportradar to continue with a traditional initial public offering.

DraftKings itself entered the market via a blank check merger. Horizon Acquisition Corp. It has yet to announce another merger partner, and has about a year left to do so, on pain of liquidation.

In 2017, Boehly’s Eldridge Industries invested $ 100 million in DraftKings.

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