-
Casinos for you
Flutter Announces a $4.18 bn Deal to Gain 95% Ownership of FanDuel
By Jeff Osienya Dec 06, 2020 IndustrySports betting and fantasy sports giant, Flutter Entertainment, which formerly operated under the Paddy Power Betfair brand name, will be upping its majority stake in FanDuel from 57.8% to 95% in a new transaction worth over $4 billion.On Thursday, 3rd December, Flutter Entertainment PLC disclosed that it had penned a $4.18 billion (£3.12 billion) conditional agreement to assume control of a much bigger chuck of FanDuel, one of the heavyweights in the sports betting and daily fantasy sports industries in USA’s regulated market. The deal in question will now allow Flutter entertainment to acquire 37.2% more stake in FandDuel from Fastball, a New York-based financial services, and asset management company.
In the transaction, Flutter will be required to pay a sum of $2.09 billion in cash to Fastball and issue roughly 11.7 million ordinary shares to Fastball to give it (Fastball) a 7% shareholding capacity of the entire Flutter company. Looking at the other side of the coin, Flutter’s stake in FanDuel will grow from just 57.8% to 95%, and Fastball’s involvement in the online sportsbook Fox Bet will officially come to an end.
Based on these figures as announced by Flutter late last week, this deal puts the estimated enterprise value of Flutter at $11.2 billion. Upon the announcement’s Flutter’s shares soared by as much as 14% before the markets closed for the day.
Flutter Continues to Dominate the Sports Betting and Fantasy Sports Industries
Flutter Entertainment PLC, formerly known as Paddy Power Betfair PLC, is a Dublin based company which came to being after Paddy Power and Betfair moved to merge their business in 2015, with the former Paddy Power owning 52% of the combined business and Betfair the remaining 48%.
Later in 2018, while still operating as Paddy Power Betfair, the company paid $158 million in a merger acquisition deal with FanDuel and merged its operations in the USA to form FanDuel Group. Come February 2019, the former Paddy Power Betfair acquired a 51% controlling stake of Georgian-based Adjarabet and plans to buy out the remainder 49% of the stake by 2021.
The rebrand from Paddy Power Betfair to Flutter Entertainment came in March 2019, a month after the Adjarabet acquisition, the name Flutter being the name of a betting exchange that Betfair had bought out in December 2001. According to the company’s statement during the rebranding period, changing the name Flutter was necessary to reflect the growth in the number of operations that the company was operating under its portfolio.
While Flutter was already becoming an unstoppable force in the gambling industry, it was the acquisition of Canadian-based Stars Group in May this year in a $6.95 billion agreement that propelled it to its current status, as the world’s largest online gambling brand based on revenue. Before the buy-out of Stars Group by Flutter, GVC Holdings PLC which is soon rebranding to Entain PLC was at the top of the market value pyramid in the online gambling world.
A New Flutter-Fox Arrangement Comes into Play
After taking over The Stars Group, Flutter Entertainment consequently became the owner of Fox Bet, a branch of Stars which holds an exclusive license to use Fox Corporation’s trademarks for up to 25 years. Through this commercial partnership, Fox gained a 4.99% stake in Stars, with an option to buy 50% of the US operations of Stars Group at a later date.
As we speak, Fox holds 2.6% equity in Flutter and will participate in raising $1.48 billion in capital to assist in funding Flutter’s purchase of additional FanDuel shares in a bid to maintain its stake in Flutter. Additionally, from this deal, Fox will be open to another option of buying 18.5% of FanDuel in July next year.
Lachlan Murdoch, the CEO and Executive Chairman of Fox Corporation had this to say about the ongoing arrangement:
Quote“Maintaining our ownership stake in Flutter signifies our long-term commitment to Flutter, and ongoing confidence in management’s ability to execute against the fast growing US opportunity. FOX’s audiences have proven to be highly engaged with free to play and wagering content, and we are excited to offer them access to products from Flutter’s market leading stable of US brands.”
Peter Jackson, the current Chief Executive Officer of Flutter on the other hand said that;
Quote“We gave Fox the option to acquire a stake in the business in July 2021 at fair market value, and we continue to provide them with that option, and we will be in dialogue with them to see whether they’re interested in pursuing it or not,”
You might also like