Flutter Entertainment to acquire Fastball’s stake in FanDuel for $4.1bn

Flutter Entertainment, an Ireland sports betting and gaming group, has signed a deal to acquire its subsidiary Fastball Holdings‘ 37.2% stake in US-based sports betting company FanDuel Group for $4.175 billion.

The deal is conditional on the shareholder approval of Flutter Entertainment, which was formerly called formerly Paddy Power Betfair. It will increase the Irish company’s stake in FanDuel Group from 57.8% to 95%.

As per the terms of the conditional agreement, Flutter Entertainment will pay $2.09 billion in cash and issue nearly 11.7 million of its new ordinary shares to Fastball Holdings.

FanDuel Group is said to have more than 9.5 million customers across the US. The sports betting company, which is based in New York City, offers sportsbook, online casino, daily fantasy sports, and online horse race betting products.

Flutter Entertainment to acquire Fastball’s 37.2% stake in FanDuel for $4.1bn. Photo courtesy of Flutter Entertainment.

Flutter Entertainment said that the deal also simplifies the economic position pertaining to the FOX Bet business.

As part of the $12.3 billion merger between Flutter Entertainment and The Stars Group (TSG) that was completed in May 2020, Fastball was given an economic interest in the FOX Bet business. This would have involved Fastball getting the equivalent of 11% in the uplift in the valuation of FOX Bet between May 2020 and July 2023.

Pursuant to the terms of the current deal, Fastball’s right to receive the FOX Bet value payment from Flutter has been scrapped.

Peter Jackson – Flutter Entertainment Chief Executive said: “Flutter’s initial acquisition of a controlling stake in FanDuel in 2018 has been transformational for the shape of the Group. Our number one position in the crucial US market is built on many of the assets we acquired through that transaction, supported by the broader Group’s capabilities.

“Our intention has always been to increase our stake in the business and I’m delighted to be able to do so earlier than originally planned and at a discount to its closest peer

“I would like to take this opportunity to thank our partners in Fastball for their tremendous support over the last 2½ years and for their ongoing commitment to Flutter as soon-to-be shareholders in the wider Group. We look forward to continuing to grow our US business, alongside our key media partner FOX, as further states move to regulate sports betting and gaming.”

In May 2018, Paddy Power Betfair acquired the initial controlling stake in FanDuel through a cash investment of $158m and also the transfer of its then existing US assets, which included mainly TVG and its New Jersey online casino, into a newly merged US group.

After a subsequent market access deal with Boyd Interactive Gaming, Flutter Entertainment’s stake in FanDuel Group became 57.8%.

Boyd Interactive Gaming will retain a 5% stake in the sports betting company.

Flutter Entertainment said that it plans to offer an option to FOX Sports to buy an 18.5% stake in FanDuel at fair market value in July 2021. This will be at substantively the same terms and valuation mechanism that FOX Sports and Flutter had agreed previously, which would have applied to the Fastball put and call options.

Lachlan Murdoch – Executive Chairman and CEO of Fox Corporation said: “We are delighted to participate in this capital raising. 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.”