The owner of the Houston Rockets got into the blank-check game more than two years ago. He’s finally scored a deal.
A special purpose acquisition company run by Texas businessman Tilman Fertitta has agreed to buy food delivery startup Waitr Inc. for $300 million, according to a statement Wednesday.
Landcadia Holdings Inc. is paying Waitr’s backers at least $50 million in cash and the rest in stock in a deal that will bring the food-delivery company public.
Landcadia, which raised $300 million in its IPO in 2016, will change its name to Waitr Inc. and trade on the Nasdaq after the deal closes later this year. Waitr’s management will remain in place and Fertitta will join its board.
Fertitta is familiar with the restaurant and hospitality industries. He owns and runs casino operator Golden Nugget Inc. and steakhouse chain Landry’s Inc. The Houston native paid $2.2 billion last year for the Houston Rockets, the highest price ever paid for a National Basketball Association team.
Fertitta’s business track record helped seal the deal for Waitr Chief Executive Chris Meaux, he said in an interview. Meaux says he is also a fan of Fertitta’s restaurants.
"This was certainly not on our radar about how to go public," Meaux said. "It was the intangibles of this deal that made this deal exciting. We felt that this was just the right strategic relationship for us."
Waitr started in late 2013 when there were few players in the food delivery market, Meaux said. That’s changed. Uber Technologies Inc. is delivering restaurant meals now while food delivery app DoorDash Inc. just raised $535 million from SoftBank Group Corp. and other investors.
Waitr stands out by catering to cities where the competition is light, such as midsize cities in Louisiana and Texas, Meaux said. It forms tighter marketing ties with restaurants by having photographers take pictures of menus and employs joint-marketing campaigns, he said. It also considers its drivers to be employees, rather than contractors like some rivals, he said.
The platform has about 5,000 restaurants that pay some $1,200 to $2,000 upfront to sell through the app, he said.
Waitr isn’t profitable but revenue is growing, as it expands in existing territories and branches into as many as five new markets a month, Meaux said.
He expects net revenue – or sales excluding discounts and returns – of $60 million to $70 million in 2018, or at least double from a year ago. He’s forecasting gross food sales of $265 million to $285 million, up from about $120 million 2017.
Fertitta started Landcadia with Jefferies Group Chief Executive Richard Handler so the best friends could go into business together, Fertitta told Bloomberg News last year. Fertitta is Landcadia’s CEO while Handler serves as president.
SPACs raise money to buy a company they haven’t identified yet by selling stock to investors that they have to give back if they don’t use by a certain deadline. Landcadia’s use-it-or-lose-it date is June 1, but the company has a shareholder meeting scheduled later this month to push that back to Dec. 14, according to a regulatory filing.