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News Alert: Tilman Fertitta To Take Hospitality Empire Public In Deal Valuing Company At $6.6 Billion

February 1, 2021

Hospitality titan Tilman Fertitta has announced a deal to take his Fertitta Entertainment Inc. company public via a merger with blank check company FAST Acquisition Corp. The deal values Fertitta’s Golden Nugget/Landry’s hospitality group at $6.6 billion. It’s expected to close in the second quarter of this year.

Fertitta will remain chairman, president, and CEO of the company, and be its largest shareholder with an approximately 60% interest. The group has five land-based Golden Nugget casinos, and more than 500 outlets overall across restaurant brands including Del Frisco’s, Houlihan’s, McCormick & Schmick’s, Morton’s, Bubba Gump Shrimp Co., and Rainforest Café. Pro forma 2019 sales totaled $3.4 billion, with EBITDA at $741 million. Restaurants make up about 72% of revenue and 60% of EBITDA, with gaming accounting for the remainder.

“We were looking at going public at the end of 2019, and then the pandemic happened,” Fertitta explained in an investor call this morning. “Today is an extremely opportunistic world and there were some huge deals that happened in the gaming industry in the last 18-24 months that we didn’t think we could capitalize on without being a public company. Our competition for these opportunities are all public companies with significantly more capital.”

“This is our opportunity to get public quicker than with an IPO,” Fertitta continued. “With the Covid disruptions throughout the United States there’s going to be unbelievable restaurant and gaming opportunities to do M&A, redevelopment, and rebranding. We’re looking for concept diversity in economically resilient locations.”

He noted that the company will tilt more toward the casino side moving forward, including entering new markets with the Golden Nugget brand and then placing its restaurant concepts within those casinos. “It’s the old ‘big box’ theory. Why open up 50 restaurants that do a million dollars each instead of a casino that does $50 million? But will we continue to do restaurants? Absolutely.”

Comparing the situation with the 2008-2009 financial crisis, Fertitta sees a similar opportunity for expansion as hospitality industry competition is thinned out by the pandemic. “This is when the opportunities are there,” he said.

While he’s looking to pounce on merger and acquisition plays when they arise, Fertitta also sees the potential for organic profit growth looking ahead, once conditions are ripe for a true on-premise recovery. “In 2010, when I went private, we were doing $208 million in EBITDA,” he noted, “and today it’s $741 million. Our simple playbook for growth is to return to 2019 volumes. If we do that, which we will, we know we’re going to be a lot more profitable.”—Daniel Marsteller

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