Fox Corporation hopes to acquire 18.6% stake in FanDuel at $2.2B below market value

Fox Corporation CEO Lachlan Murdoch revealed the company’s intention to exercise an option to acquire an 18.6% stake in the betting company FanDuel, with the potential deal valued significantly below current market rates.

Speaking at the Goldman Sachs Communacopia and Technology Conference, Murdoch noted that analysts from Goldman Sachs appraise FanDuel, owned by Flutter, at $35 billion. This valuation suggests Fox’s potential stake in FanDuel could be worth approximately $6.5 billion on the open market. However, Fox estimates it will only need to pay $4.3 billion based on a financial report filed last month.

The connection between Fox and FanDuel was established following Flutter’s 2020 acquisition of The Stars Group, which included a purchase option for FanDuel. The exact price for this option, which increases by 5% annually, was contested in a legal battle culminating in a 2022 arbitration ruling.

Before completing the transaction, Fox must secure licensing as a gaming operator. Murdoch indicated that the company is actively working with state legislators to achieve this, despite the complex and demanding process. “We’re not going to leave $2 billion on the table,” Murdoch stated.

In a previous agreement, Fox and Flutter decided to close the underperforming sports betting platform Fox Bet, which was acquired by Flutter as part of its purchase of The Stars Group.

Looking ahead, Fox aims to leverage its stake in FanDuel to enhance its sports betting strategy and further engage its television audience. Despite having six years to activate the option, Fox is keen to proceed well before the deadline.

In 2022, an arbitrator set the cost of Fox’s stake at $3.7 billion with a 5% annual escalation, a compromise that was well-received by both Fox and Flutter. Fox did not provide additional comments on the matter, and Flutter declined to comment.