Flutter to consider FanDuel IPO as US competition intensifies
Board allegedly under pressure from investors to spin off undervalued asset in comparison to long-time US rival DraftKings
Flutter Entertainment will consider a spin off and public float of FanDuel in the US.
On Friday, CNBC suggested Flutter’s board of directors was under increasing pressure from shareholders to spin off FanDuel into separate US business and IPO in New York.
Shareholders are understood to be frustrated at FanDuel’s undervaluation compared to rival and stock market darling DraftKings, which went public last April via a SPAC and has seen its share price rise 300% since, despite FanDuel becoming the sports betting market leader in the US.
Reports have claimed that Flutter’s $4.2bn deal to acquire an additional 37.2% stake in FanDuel, a move which brought the firm’s interest in the business up to 95% (Boyd Gaming owns the remaining 5%), was a precursor to a potential listing.
The deal in December valued FanDuel at around $11.2bn at the time, while DraftKings’ market cap hovered around $20bn. Today, DraftKings’ market cap stands at $28.5bn while Flutter’s is just under £30bn at the time of writing. Barclays Capital said FanDuel trades at an implied discount of 27% to its rival.
Flutter’s US operations, which include FanDuel, Fox Bet, TVG, PokerStars and Betfair, generated $896m in revenue during 2020. DraftKings accrued $644m over the same period.
US media firm Fox Sports, which owns 2.5% of Flutter, has the option to purchase an 18.5% stake in FanDuel in July, a move which may delay a potential IPO of FanDuel.
“Flutter notes the recent press speculation in relation to a potential IPO of FanDuel, the group’s US business,” the operator said in a statement.
“Flutter regularly evaluates its organisational and capital structure to assess how best to position itself to deliver upon the group’s strategy.
“Options including the listing in the US of a small shareholding in FanDuel are being considered but no decision has been made at this time.
“Should a decision be made to proceed with a listing in due course, an announcement will be made as appropriate,” the FTSE 100 operator concluded.