A combination between a special purpose acquisition company (SPAC) and the online gaming arm of a major US casino operator will not materialize after both parties agreed to terminate their previously agreed definitive agreement.
Wynn Interactive Re-Thinking Marketing Strategy
Wynn Resorts entered, in May of this year, into a definitive agreement with Austerlitz Acquisition Corporation I to merge its Wynn Interactive subsidiary with the SPAC and create a separate business entity valued at $3.2 billion and listed on the NASDAQ, but now the combination is off.
According to the announcement today, the termination of the agreement is effective immediately, but neither Wynn nor the blank check company backed by billionaire investor William Foley provided any reason as to why they decided to call off the deal.
Craig Billings, chief executive officer of Wynn Interactive provided some insight why the company suddenly changed its mind, pointing to the intense competition in the sports betting space, which is forcing the business to reconsider its marketing strategy built on heavy marketing and promotional spend, and hence the need for outside investment via the merger and subsequent public trading.
“…[In] light of elevated marketing and promotional spend in the sports betting industry, we are pivoting our user acquisition efforts to a more targeted ROI-focused strategy. In so doing, we expect the capital intensity of the business to decline meaningfully beginning in the first quarter of 2022,” Billings, who was unanimously elected to become CEO of Wynn Resorts, commented.
With our continued rollout of product features and planned new state launches, including New York, we remain excited about WynnBET’s future… WynnBET’s best days lie ahead of us.”
Craig Billings, CEO, Wynn Interactive
Since the end of August, WynnBet gained entries into Arizona in collaboration with the San Carlos Apache tribe, Louisiana and West Virginia, where the brand struck a partnership with Delaware North, to bring the total amount of states where it has access to 18.
SPAC Merger Trend Decreasing
The called-off merger agreement between Wynn Resorts and Austerlitz is the latest SPAC-oriented deal to collapse, following hot in the heels of terminated agreements for the combination between leading specialty e-commerce and content platform BBQGuys and Velocity Acquisition Corp., as well as Bill Ackerman’s SPAC Pershing Square Tontine Holdings with Universal Music Group.
It is no secret that a SPAC is the preferred path to go public by investors as it avoids the audit required for an initial public offering (IPO), but as the US Securities and Exchange Commission (SEC) is tightening its accounting guidance and exercising closer scrutiny, the SPAC market’s lure is decreasing.