Well, this is timely….we’ve had another “deal leak” tonight, right on the heels of the Churchill II/Univision leak, but this time, it’s Diamond Eagle (DEAC) and DraftKings.  Per the article posted tonight on Bloomberg, DraftKings Inc., the fantasy sports and gambling company, is said to be in negotiations with Diamond Eagle. Weirdly enough, one of the other Eagles, Platinum Eagle, was in talks last year to buy DraftKings’ competitor – FanDuel, but obviously that deal fell through and Platinum Eagle ultimately combined with Target Hospitality (TH).  However, like a moth to the flame, the Eagles just keep circling the alluring light of gambling.

However, to re-emphasize a point made in just this past week’s SPACInsider newsletter, the leak of a rumored SPAC combination is really not in the best of interest of a SPAC.  Once news of a currently negotiated deal gets out, it risks the potential for competing bids. This is why it’s generally pretty rare for intended SPAC combinations to be leaked ahead of any announcements, lest the target gets a better offer before a definitive agreement can be signed.  To be clear, it’s problematic for all acquiring companies (SPAC or not) to have word of their acquisitions leaked, but it’s especially acute for SPACs that really need to buy at a discount. A bidding war is not even an option.

However, in the case of DraftKings, who else could possibly be in contention for a purchase, or make a competing bid?  DraftKings already tried to merge with Fan Duel, but the deal was shut down due to anti-trust issues.  So are there any other interested buyers? In some weird Fantasy SPAC League, there would be a Gordon Pointe/HOF Village merger with Diamond Eagle/DraftKings to form a Super Duper NFL Hall of Fame/Fantasy Football entertainment company.  SPACs merging with SPACs….a Super SPAC, if you will. This is meant in jest, that’s probably not even possible. Nevertheless, what’s even stranger about tonight’s Diamond Eagle/DraftKings leak is, leaks seems to happen pretty frequently with the Eagle team.  As mentioned above, there was a leak with Platinum Eagle and FanDuel, a leak with Double Eagle and Playboy, and now a leak with Diamond Eagle and DraftKings.  Is this just a weird coincidence?

Regardless, if the rumors are true, this could be an interesting deal.  According to recent reports from earlier this month, DraftKings was looking to raise additional capital that would value the company at $2 billion with an additional goal of looking to IPO in the next few years.  A successful SPAC acquisition could potentially solve some of those goals with an accelerated time-line.  Especially since the traditional IPO window has had a tough go of it lately.  As the saying goes, “when IPOs are shutting down, SPACs are still around”.  That’s not really a saying, but maybe it should be.

Stay tuned for any further “leaks”.