December 3, 2020
Flutter Entertainment Plc said it’s buying Fastball Holdings LLC’s stake in FanDuel for $4.2 billion to get almost full ownership of the fast-growing U.S. bookmaker. Flutter shares rose as much as 14% to a record high.
Flutter will pay $2.09 billion in cash and issue about 11.7 million new Flutter ordinary shares to Fastball under the conditional agreement, taking its stake in FanDuel to 95% from 57.8%, it said Thursday in a statement. The deal gives FanDuel an estimated enterprise value of $11.2 billion.
Dublin-based Flutter, formerly known as Paddy Power, has leapfrogged competitors like GVC Holdings Plc in market value after buying Canada’s The Stars Group earlier this year.
Competition is intensifying as companies such as BetMGM and Barstool Sports compete with FanDuel and its main rival DraftKings to capture surging demand.
The acquisition from Fastball “leaves Flutter with 95% of its prize asset, and clears up uncertainty that has overhung the shares,” Jefferies analyst James Wheatcroft said in a note.
The Stars takeover gave Flutter ownership of Fox Bet, a Stars unit that has an exclusive license to use trademarks of Rupert Murdoch’s Fox Corp. for up to 25 years and spends money on Fox advertising.
That commercial partnership brought Fox a stake of 4.99% in Stars, plus an option to acquire half of Stars’ U.S. operations. Fox now has 2.6% of Flutter’s equity, and said it will take part in the capital raising announced Thursday to maintain its stake in the Irish company.
Fox has also kept options to acquire more of FanDuel and options regarding Fox Bet, Flutter Chief Executive Officer Peter Jackson said on a call with reporters.
“The first person I rang to tell about this deal on a confidential basis was Lachlan Murdoch,” the CEO of Fox, Jackson said. “Fox are an incredibly important media partner.”
Goldman Sachs International and Davy advised Flutter, and are managing the placing. Moelis & Co. acted as exclusive financial adviser to Fastball.
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