Posted on Dec 2nd 2021 at 3:32am.
Last updated on: December 3, 2021, 10:26 am.
FAST Acquisition (NYSE:FST), the blank check company that agreed to a merger with Tilman Fertitta’s Fertitta Entertainment (FEI) in February, is not cooperating with the Texas billionaire’s efforts to terminate that agreement. This may set the stage for litigation.
In February, Golden Nugget Casinos’ parent company and Special Purpose Acquisition Company (SPAC) settled on a $6.6 billion combination. This deal would pave the way for the entertainment company to become a public company again.
In July, additional Landry’s restaurants were added to the deal, taking the deal to $8.6 billion. Landry’s owns more than 500 restaurants under the Bubba Gump’s, Chart House, Del Frisco’s, Mastro’s and Morton’s brands, among others. FAST also reached an agreement to purchase the Catch restaurant, including Catch Steak, already indirectly 50 percent owned by Fertitta.
From that point on, the merger went quiet, leading SPAC pundits and observers to ponder why it took so long to complete the transaction. That changed on Wednesday, when Fertitta’s attorney sent a letter to FAST detailing plans to end the merger because the merger was ongoing.
FAST Objects blames Fertitta for delays
While Fertitta’s gaming and restaurant empire points the finger at FAST, the shell company says it’s not their fault the transaction doesn’t go through. In fact, it blames Fertitta Entertainment, saying it failed to provide the required financial reports.
The statements “are undoubtedly the primary cause of the failure to close through the Termination Date, and as such, FEI remains fully bound by its obligations under the Merger Agreement.” according to a FAST regulator.
The SPAC alleges that the financial documents in question were not served until July — well past the March 31 due date. FAST believes it faces irreparable harm if the deal goes through, and if it does, it will pursue litigation.
“The company has further stated that it intends to take all necessary steps to protect itself and its investors,” the filing reads.
SPACs have two years to find a merger partner or risk liquidation. FAST went public in August 2020, so the clock is ticking. Speaking of blank check agreements, Fertitta notes that the situation with FAST has no bearing on Golden Nugget Online Gaming (NASDAQ:GNOG) being acquired by DraftKings (NASDAQ:DKNG) in an acquisition of all shares for $1.56 announced in August becomes.
It is not uncommon for SPAC deals to fall apart or be cancelled. It recently happened in the gaming industry when Wynn Resorts (NYSE:WYNN) pulled the plug on plans to take its Wynn Interactive unit public through a merger with a shell company.
As for the FEI going public without FAST, there are many questions that need to be answered on that front.
Late last year, rumors surfaced about Fertitta’s interest in returning Golden Nugget/Landry’s operations to the public markets. So has speculation that a traditional initial public offering (IPO) could be difficult due to weakness in the restaurant industry and the company’s $4 billion in debt. Fertitta took the Golden Nugget/Landry business private in a leveraged buyout in 2010.