DraftKings goes public in a deal with former Hollywood executive Jeff Sagansky

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DraftKings Inc. is going public in a deal with former Hollywood executive Jeff Sagansky that values the sports betting firm at about $3.3 billion.

The Boston-based company said it agreed to be sold, alongside gaming technology giant SBTech, to Diamond Eagle Acquisition Corp., a publicly traded special purpose acquisition company. The combined group, which will house both DraftKings and SBTech, will trade under the name DraftKings Inc.

Diamond Eagle is the fifth SPAC set up by serial dealmaker Sagansky. SPACs raise money from public investors to pursue acquisitions, allowing a private company to go public without an initial public offering.

The deal continues a string of mergers in the fast-growing U.S. sports betting market. FanDuel, DraftKings’s longtime fantasy sports rival, was sold to Irish bookmaker Paddy Power Betfair Plc last year. That group later agreed to merge with Canadian betting company Stars Group, which is a partner in the Fox Sports app Fox Bet.

Bloomberg News was first to report that Diamond Eagle was in talks to acquire DraftKings. The new company will continue to be led by DraftKings co-founder and Chief Executive Officer Jason Robins.

Institutional investors are committing $304 million at closing, including funds managed by Capital Research and Management Co., Wellington Management Co., and Franklin Templeton. The combined company will have more than $500 million of unrestricted cash, according to a statement.

DraftKings was founded in 2011 as a fantasy sports company. Its earlier investors include the Raine Group, and the owners of the New England Patriots.

SBTech provides backend technology and trading services to gaming companies around the world. It has more than 50 partners in over 20 legal markets, and recently won an exclusive contract to operate sports betting in Oregon through the state lottery.

Bloomberg News