Skillz Mobile-Game Company to Go Public Via Blank-Check Deal

(Bloomberg) -- Skillz Inc., a mobile-gaming company with titles like Solitaire Cube and Jewel Blitz, will go public by merging with blank-check company Flying Eagle Acquisition Corp., giving it an equity valuation of $3.5 billion.

Investors, including Wellington Management, Fidelity Management & Research, Franklin Templeton and Neuberger Berman, have committed $159 million in the form of private investment in public equity, according to a statement Wednesday. They’ve set a price of $10 per share of Flying Eagle.

The deal reflects the growing popularity of using SPACs, or special-purpose acquisition companies, to list promising startups without the hurdles of an initial public offering. Skillz focuses on the genre of casual esports tournaments -- non-hardcore gamers playing one another in card games and other contests -- and has more than 2.7 billion people playing its titles per month.

Harry Sloan, a Hollywood veteran who oversees Flying Eagle, previously took the SPAC approach with DraftKings Inc. Shares of the sports-betting company have soared since it agreed to go public at the end of last year.

The Skillz deal sent shares of Flying Eagle up 27% to $14.02 on Wednesday.

Skillz Chief Executive Officer Andrew Paradise said his company had planned to be ready to go public by the fourth quarter of this year.

“This SPAC route and Covid sort of both fell into place in the last six months,” he said in an interview on Bloomberg Television. “As you guys are probably aware, the video-game industry has seen exceptional growth due to Covid.”

With pandemic lockdowns leading to a boom in video-game playing, Skillz had its best quarter in the history of the company in the second quarter. “This allowed us to go public faster and, most importantly, to choose our partners with a minimal cost difference in our case,” Paradise said.

Proceeds from the deal will consist of Flying Eagle’s $690 million cash pile. The company’s stockholders have the right to redeem shares worth more than $95 million, but they’ve agreed not to, according to the statement.

After the transaction, Skillz will have about $250 million in cash on its consolidated balance sheet. The gaming company plans to use the money to expand into new markets and accelerate marketing. Paradise and Casey Chafkin, Skillz’s chief revenue officer, will continue to lead the company.

Existing Skillz stockholders and Flying Eagle sponsors have agreed to a 24-month lockup.

©2020 Bloomberg L.P.