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Landcadia Scores a Big Legal Win as Merger Approaches

Landcadia Holdings (NASDAQ:LCA) is one of the numerous special purpose acquisition companies (SPACs) that have gone public this year. LCA stock has so far been one of the more successful ones, as its shares have now doubled from the original price.

Image of a laptop surrounded by gambling paraphernalia.
Image of a laptop surrounded by gambling paraphernalia.

Source: Stokkete/

In fact, it’s been a banner year for SPACs, as traders have gravitated to firms that go public while eschewing the traditional initial public offering (IPO).

However, this party could have come to an abrupt end. Due to specifics around Landcadia’s planned merger with Golden Nugget, it was possible that the deal could fall through. Fortunately for shareholders, Landcadia overcame this obstacle.

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Now, with that out of the way, shares are soaring again. So, what happened, and what do things look like going forward?

Casino Rules

One particular quirk for this SPAC deal is that it involves casino gaming. Because gaming is closely regulated, many states have specific agencies set to oversee and monitor the competitive environment. In the case of New Jersey, it has the Casino Control Commission for handling these sorts of matters.

The Casino Control Commission had to approve the transfer of Golden Nugget’s license away from the existing gaming company to the new Landcadia/Golden Nugget Online Gaming vehicle.

If the Casino Control Commission had found anything troublesome about Landcadia’s request, it could have killed the whole deal. Without a license, a gaming company isn’t going anywhere.

Fortunately, Landcadia had its paperwork in order and the Casino Control Commission came through with the approval. Landcadia put out an official press release thanking New Jersey for its accommodating stance toward the proposed merger.

Impact of the Decision

You could see how much traders were focused on this ruling by the trading action in LCA stock this past Wednesday as the decision was being made. Shares initially opened higher and were around $18.

Then, however, the regulatory body took a recess prior to announcing its decision. On social media, folks began to speculate about what was happening. LCA stock quickly dropped $2 per share on massive trading volume.

As soon as the ruling came in positively, however, the stock rebounded to $18. And as the approval further spread around the news wires, LCA stock surged even more during the next trading day. All in all, Landcadia jumped 20% from the lows as traders reacted to the legal decision.

So make no mistake, this was a big deal. It’s unclear what would have happened to the merger without this approval, but now, that’s not something that anyone needs to worry about.

LCA Stock Verdict

So what’s next for Landcadia? Originally, we’d been looking at the Landcadia merger closing with Golden Nugget Online Gaming by the end of November. However, this timeline may be pushed back a bit, as this ruling was needed before shareholders could approve the merger and make it official.

Next up, according to Landcadia’s general counsel, is receiving approval from the Securities and Exchange Commission (SEC).

“We are now waiting on the SEC to approve our definitive proxy statement for mailing to our stockholders and approval from our stockholders of the transaction, which we hope will happen in the near future,” the counsel said.

Still, with this regulatory issue now taken care of, the merger by all accounts should be able to close fairly quickly, and set the stage for a run in 2021. Remember how DraftKings (NASDAQ:DKNG) went from the teens to as high as $60 once its SPAC merger officially closed?

LCA stock is unlikely to run up quite that far, as Golden Nugget is still a more geographically-limited business than DraftKings at this point.

However, you could get a somewhat similar sort of effect once the deal is official and hot money starts to come into the trade. I previously made the argument for LCA stock being a worthwhile investment in the gaming industry.

As the official Golden Nugget Online Gaming merger comes ever closer to completion, the bull case is getting stronger. As such, LCA stock should have further upside.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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