Flutter Entertainment has announced that it has won a New York arbitration against Rupert Murdoch’s FOX Corporation related to the ownership terms and valuation of FanDuel.
The FTSE100 gambling group has settled its 18-month legal dispute against the US media network that had initiated an arbitration on the terms of its option to acquire an 18.6% stake in FanDuel and further ownership issues.
Legal proceedings began in April 2021, as Fox demanded a ‘fair market value’ on FanDuel, following Flutter’s decision to exercise options to acquire its US asset outright, agreeing on terms to buy a remaining 37.2% stake from FastBall Holdings for $4 billion.
Agreed on 3 December 2020, the transaction saw dealmakers value FanDuel at an ‘implied valuation of $11.2bn’, disputed by FOX.
Further proceedings saw FOX claim that “Flutter had failed to provide commercially reasonable resources for FOX Bet”, a US joint-venture formed by FOX and The Stars Group Inc (TSG) prior to TSG merging with Paddy Power Betfair (PPB) in 2020 – a deal which led to the creation of Flutter Entertainment.
As a strategic partner, FOX was granted a ten-year exercise option (from December 2020) to acquire an 18.6% stake in FanDuel, which carried a fixed annual compound adjustment rate of 5%.
This morning, Flutter announced that “the tribunal has determined the fair market value of FanDuel as of December 2020 amounts to $20bn. This contrasts with an implied $11.2bn valuation for FanDuel when Flutter acquired the stake from Fastball.”
Subject to the 5% annual compound adjustment rate up to December 2030, Flutter can value FanDuel at $22bn, pricing FOX’s exercise option for an 18.6% stake at $4.1bn.
Flutter CEO Peter Jackson commented: “Today’s ruling vindicates the confidence we had in our position on this matter and provides certainty on what it would cost FOX to buy into this business, should they wish to do so.”
“FanDuel is winning in the US market and the clear #1 operator, a position driven by its exceptional market-leading product and efficiency in acquiring customers at scale. The team remain focused on maintaining our leadership position, and we look forward to updating the market on our progress at our US capital markets day on 16 November.”
Flutter notified of a remaining matter for the NY tribunal related to the conditions FOX is entitled to participate in an IPO of FanDuel.
The FTSE gambling group has agreed that it will not proceed with a FanDuel IPO until the tribunal has resolved the remaining matter or both parties have reached an agreement on the issue – “a binding decision from the arbitrator on this point is expected in early 2023.”