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Thursday, Sep 29, 2022

Flying Eagle Sets Deal for Mobile Gaming Company Skillz

Flying Eagle Acquisition Corp., a Century City-based special purpose acquisition company, or SPAC, plans to merge with mobile gaming platform Skillz Inc. The deal values Skillz at $3.5 billion, according to the company.

Based in San Francisco, Skillz hosts a range of relatively approachable competitive mobile games such as “Solitaire Cube” and “21 Blitz” in what it calls the “casual esports” space.  

SPACs, also called blank-check companies, are investment vehicles with no operations of their own. They are used to raise investor funds through an initial public offering for later acquisitions and mergers. Flying Eagle is the sixth such company created and led by ex-Hollywood executives Harry Sloan and Jeff Sagansky. 

Sloan, a former chief executive of MGM Holdings Inc. and founding investor of Zeni-
Max Media Inc., said he has watched the video game industry evolve over the last two decades. The Flying Eagle founder said he had been looking to invest in the growing esports space for several years, but until now, had not found an appropriate target for his SPACs to take public.

After meeting Skillz founder and Chief Executive Andrew Paradise in 2017, Sloan said he gradually came to see the platform as the perfect candidate for a SPAC merger. 

“The SPAC is a way to bring a completely unique platform without comps to the market and value it properly,” he said. “The idea that Skillz is a pure-play, casual esports platform is totally unique.”

Sloan said Skillz’s strong revenue growth also played a central role in drawing him to the company, particularly given current market preferences for high-growth companies. 

“This was just really good timing,” he said. “This is the right market for a major grower.”

In addition to the $690 million brought by Flying Eagle from its March initial public offering, major investors Wellington Management Co., Fidelity Management & Research Co., Franklin Resources Inc., and Neuberger Berman Group have committed a total of $159 million as part of the deal.

Skillz is Sloan’s second major deal this year. In January, the local SPAC veteran joined his fifth blank-check company, Diamond Eagle Acquisition Corp., with DraftKings Inc. and SBTech Ltd. in a three-way merger. 

The deal created one of the only public pure-play sports betting companies and helped draw SPACs into the mainstream investing limelight.

The new company, also named DraftKings Inc., has performed well during the Covid-19 pandemic, approximately doubling its share price since its late-April listing, compared to a rise in the S&P500 of about 18%.


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