Skillz Set to Go Public Following Merger with SPAC, Flying Eagle Acquisition (FEAC)

September 2, 2020 6:04 AM EDT

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Skillz Inc., (“Skillz”) a leading mobile games platform connecting players in fair, fun, and meaningful competition, and Flying Eagle Acquisition Corp. (NYSE: FEAC) (“Flying Eagle”), a publicly-traded special purpose acquisition company, agreed yesterday to a business combination that will result in Skillz becoming a publicly-listed company.

  • Investors including Wellington, Fidelity, Franklin Templeton, and Neuberger Berman funds have committed to a $159 million PIPE with total commitments exceeding $250 million.
  • High growth business with projected 2022 revenue of $555 million, a 57% CAGR from 2020
  • Andrew Paradise, CEO & Founder of Skillz, and Casey Chafkin, CRO and Founder of Skillz, will continue to lead the company
  • Existing Skillz stockholders and Flying Eagle sponsor agree to 24-month lock-up
  • Investor call scheduled for September 2, 2020

Skillz is pioneering the competitive mobile gaming experience, powering tournaments for thousands of game developers around the world, expanding and leading growth in the mobile gaming market. It is anticipated that in 2020, Skillz’s patented technology will power over two billion casual esports tournaments and facilitate $1.6 billion in paid entry fees for games hosted on its secure and proprietary platform.

The gaming industry is larger than movies, music, and books, with more than 2.7 billion gamers playing monthly and 10 million developers worldwide. Mobile is the fastest-growing segment of the gaming market, expected to increase from $68 billion last year to $150 billion in 2025 (according to Newzoo and GlobalData).

“Today we’re a leader in casual esports and are well positioned to capture the global esports opportunity which will increasingly define the gaming market,” said Andrew Paradise, CEO and Founder of Skillz. “Skillz fulfills the human desire for community and competition and is shaping the future of interactive entertainment.”

“I’ve been active in the evolution of gaming for 20 years, from ZeniMax to DraftKings, and I believe Skillz has positioned itself as the platform for the future of gaming, where entertainment, gaming, and enablement converge,” said Flying Eagle Chairman and CEO, Harry E. Sloan.

Sloan’s involvement in the video game business dates back to 1999 when he was a founding investor and board member of ZeniMax Media Inc., the award-winning creator and publisher of interactive entertainment and its Bethesda Game Studio. Sloan is partnered on Flying Eagle with Jeff Sagansky and Eli Baker, who together took DraftKings (Nasdaq: DKNG) public in April 2020.

Skillz has earned recognition as one of Fast Company’s Most Innovative Companies, a two-time winner of CNBC’s Disruptor 50, Forbes’ Next Billion-Dollar Startups, and the #1 fastest-growing company in America on the Inc. 5000. Through its philanthropic initiatives, Skillz has used its platform to transform the way nonprofits engage with donors, enabling anyone with a mobile device to support great causes such as the American Red Cross, American Cancer Society, and NAACP by playing in Skillz tournaments.

“Becoming a public company is an important milestone for Skillz,” added Paradise. “We look forward to accelerating growth as we work with our developer partners to bring Skillz-powered competitions to every kind of game for billions of gamers worldwide.”

Key Transaction Terms

The transaction implies an equity valuation for Skillz of $3.5 billion, or 6.3x projected 2022 revenue. Estimated cash proceeds from the transaction are expected to consist of Flying Eagle’s $690 million of cash in trust. In addition, investors led by Wellington Management Company, Fidelity Management & Research Company, LLC, Franklin Templeton, and Neuberger Berman funds have committed to invest $159 million in the form of a PIPE at a price of $10.00 per share of Class A common stock of Flying Eagle immediately prior to the closing of the transaction. Flying Eagle’s stockholders with the right to redeem shares representing in excess of $95 million of cash in trust have agreed not to exercise such rights in connection with the transaction.

It is anticipated that post-transaction Skillz will have approximately $250 million of cash and cash equivalents on its consolidated balance sheet. The company expects to use the proceeds to accelerate Skillz’s growth in both domestic and international markets, support marketing efforts, and provide additional working capital.

Skillz stockholders may elect to receive their consideration in either cash or stock of the combined company (or a combination of both), subject to a maximum cash amount. The maximum cash amount will be an amount equal to the cash remaining in Flying Eagle’s trust account (after taking into account any redemptions by its public stockholders and payment of Skillz’s and Flying Eagle’s outstanding transaction expenses), plus the amount to be received from the PIPE investment, plus the closing cash of Skillz less $250 million (which will remain on the consolidated balance sheet of the combined company). If the aggregate amount of cash elected to be received by the Skillz stockholders exceeds the maximum cash amount, the cash to be received by each Skillz stockholder electing to receive cash will be reduced on a pro rata basis and the Skillz stockholders will receive additional stock of the combined company. If the aggregate amount of cash elected to be received by the Skillz stockholders is less than the maximum cash amount, the excess cash will be allocated pro rata among the Skillz stockholders and the number of shares of the combined company to be received by each Skillz stockholder electing to receive stock consideration will be adjusted downwards.

Paradise, Chafkin, substantially all of the existing Skillz stockholders as well as Flying Eagle’s sponsor have agreed to a 24-month lock-up, subject to quarterly releases of 1.5 million shares per holder commencing 180 days following the closing. Upon the closing of the transaction, Paradise, who holds a controlling voting interest in Skillz, will hold a controlling voting interest in the combined company.

The Boards of Directors of each of Flying Eagle and Skillz have unanimously approved the transaction. The transaction will require the approval of the stockholders of both Flying Eagle and Skillz, and is subject to other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the Fall of 2020.

LionTree Advisors and Jefferies LLC are acting as financial advisors to Skillz. Winston & Strawn LLP is acting as legal advisor to Skillz. Goldman Sachs & Co. LLC is acting as financial advisor to Flying Eagle as well as the exclusive placement agent for the PIPE. White & Case LLP is acting as legal advisor to Flying Eagle.

Investor Conference Call Information

Skillz and Flying Eagle will host a joint investor conference call to discuss the proposed transaction today, Wednesday, September 2, 2020 at 8:30 am ET.

To listen to the prepared remarks via telephone dial 1-877-407-4018 (U.S.) or 1-201-689-8471 (International) and an operator will assist you. A telephone replay will be available at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International), replay pin number: 13709664 through September 9, 2020 at 11:59 pm ET.

Flying Eagle will file an investor presentation relating to the proposed transaction with the SEC as an exhibit to a Current Report on Form 8-K prior to the call, which will be available on the SEC’s website at

About Skillz Inc.

Skillz is the leading mobile games platform that connects players in fair, fun, and meaningful competition. The Skillz platform helps developers build multi-million dollar franchises by enabling social competition in their games. Leveraging its patented technology, Skillz hosts billions of casual esports tournaments for millions of mobile players worldwide, and distributes millions in prizes each month. The company is headquartered in San Francisco and backed by leading venture capitalists, media companies, and professional sports leagues and franchises. Skillz has earned recognition as one of Fast Company’s Most Innovative Companies, CNBC’s Disruptor 50, Forbes’ Next Billion-Dollar Startups, and the #1 fastest-growing company in America on the Inc. 5000.

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