Flutter signs $4.18B deal to own 95% stake in FanDuel

Flutter Entertainment on Thursday struck a $4.18 billion (3.12 billion pounds) deal to secure control of most of FanDuel, increasing its holding in that company to 95% and ending Fastball’s involvement in online sports betting platform FOX Bet. The deal values FanDuel at $11.2 billion.

Paddy Power Betfair’s owner Flutter, which merged its U.S. business with FanDuel in 2018, said it was exercising an option ahead of schedule and buying a 37.2% stake from Fastball with a combination of cash and shares, Reuters reports. The deal also leaves the door open to further involvement by U.S.-based FOX Sports, owned by Fox Corporation, giving it the option to buy 18.5% of FanDuel in July next year. Fastball will hold 7% of Flutter after the deal completes. Boyd Interactive Gaming will maintain the additional 5% ownership stake in FanDuel.

“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,” Lachlan Murdoch, Executive Chairman and CEO of Fox Corporation said in a statement. “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.”

Flutter said it will raise 1.1 billion pounds ($1.48 billion) in equity to partly fund the purchase, with Fox Corporation participating in the capital raising. “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,” Flutter CEO Peter Jackson said after the announcement. Jackson said Fox held 2.6% of Flutter Entertainment ahead of the placing.

The deal would simplify the position of FOX Bet, in which Fastball was given an interest as part of Flutter’s 2019 merger with Canada’s The Stars Group, creating one of the world’s largest online betting and gaming operators, Flutter said. “We’re increasing our exposure to the U.S. at a time when the regulation of sports betting and online gaming is accelerating,” Jackson said on a conference call. “We are also acquiring the stake at a material discount to our own estimate of the intrinsic value of the business.”

Flutter plans to pay for the stake through a combination of $2.09 billion in cash and the issue of about 11.7 million new ordinary shares directly to Fastball.

By the end of 2021, Flutter expects its online sports betting products to be available in states accounting for one-third of the U.S. population. The United States is seen as the next big growth market for sports betting, spawning a series of transatlantic partnerships tapping into European expertise such as UK’s William Hill being bought by Caesars Entertainment in a 2.9 billion pound ($3.9 billion) deal announced in September.