DraftKings to acquire Jackpocket for $750M

DraftKings announced that it has reached an agreement to acquire Jackpocket, the lottery app in the United States, for total consideration of approximately $750M, with approximately 55% of the consideration payable in cash funded from the company’s balance sheet with no capital raise required and approximately 45% of the consideration payable in the company’s Class A common stock, subject to customary purchase price adjustments. Conservatively assuming no additional OSB and iGaming legalization in the U.S., DraftKings expects the proposed transaction to drive $260M to $340M of incremental revenue and $60M to $100M of incremental adjusted EBITDA in fiscal year 2026. On the same basis, assuming no additional OSB and iGaming legalization in the U.S., DraftKings expects the proposed transaction to drive $350M to $450M of incremental revenue and $100M to $150M of incremental adjusted EBITDA in fiscal year 2028. Under the terms of the merger agreement entered into on February 11, Jackpocket stockholders will receive total consideration of approximately $750M on a fully diluted basis, consisting of approximately $412.5M in cash, subject to certain customary purchase price adjustments, and approximately $337.5M in the company’s Class A common stock, subject to the collar mechanism described below. The stock consideration will be subject to a collar pursuant to which a variable number of shares of DraftKings’ Class A common stock will be issued to Jackpocket stockholders in order to deliver a value of approximately $337.5M, so long as the 30-trading-day volume weighted average price of DraftKings’ Class A common stock as of the second trading day immediately preceding the closing of the proposed transaction remains between $31.68 and $42.86. In the event that DraftKings’ closing stock price is above $42.86 or below $31.68, Jackpocket stockholders will receive a fixed number of approximately 7,874,806 shares or approximately 10,654,149 shares, respectively, of DraftKings’ Class A common stock, representing approximately 2% of the outstanding shares of DraftKings’ Class A common stock. The merger agreement and the proposed transaction have been approved by the boards of each of DraftKings and Jackpocket, as well as Jackpocket’s stockholders.