Flutter Entertainment on Thursday struck a $4.2 billion to secure control of most of FanDuel, the latest deal in the fast-moving U.S. sports-betting market.
Flutter said the cash and stock deal to acquire 37% of FanDuel, which operates U.S. sports betting and daily fantasy, will expose it further to the “most attractive opportunity” in the sector today, from Fastball Holdings.
Fastball Holdings is a consortium of Google Ventures Comcast Ventures KKR Verizon Ventures NBC Sports Group, and Shamrock. Fastball will hold 7% of Flutter after the deal completes.
Flutter shares shot up 12% in London after the deal was announced.
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 deal implies an enterprise value for FanDuel, a rival to DraftKings of $11.2 billion. Flutter said that is a 40% discount to DraftKing’s valuation, which it said was because of Fastball’s “minority position in FanDuel, the provision of price certainty and liquidity to Fastball as well as allowing it to expedite the payment it receives for its full stake.”
A complicated structure would have involved fair market valuations being conducted for FanDuel in 2021 and 2023. “The board has concluded that it is in the best interest of Flutter shareholders to avail of the discount factors through this alternative transaction now and thus remove pricing uncertainty in acquiring Fastball’s stake in FanDuel,” the company said.
The deal also eliminates an option for Fastball to get a payment based on the valuation of Fox Bet.
Fox Corp. said it would participate in the equity offering by Flutter.
“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 U.S. 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 U.S. brands,” said Fox Chief Executive Lachlan Murdoch.
Fox and News Corp, the publisher of MarketWatch, share similar ownership.
Boyd Gaming Corporation will still hold 5% of FanDuel.