Flutter to “vigorously defend” position in Fox-filed FanDuel lawsuit
Fox Corporation initiates legal challenge in dispute over share purchase deal relating to $11.2bn FanDuel business
Flutter has offered the FanDuel stake option to Fox at “fair market value” as of July 2021.
However, Fox last week filed a lawsuit with the New York Judicial Arbitration and Mediation Service (JAMS) requesting an option to purchase the stake at the same value Flutter paid Fastball Holdings, made up of a consortium of investors, for its 37.2% share of the business back in December 2020.
This saw Flutter’s overall shareholding in FanDuel rise from 57.8% to 95% and valued FanDuel at $11.2bn.
In a statement, Fox Corporation said: “Fox Corporation has filed suit against Flutter to enforce its rights to acquire an 18.6% ownership interest in FanDuel Group – an American sports betting brand – for the same price that Flutter paid for that interest in December 2020.”
Based on the commensurate terms of that deal being applied to the 18.6% purchase by Fox, the US media conglomerate would pay just over $2bn for the stake.
The agreement between the two businesses provides for an arbitration process, should they fail to agree on a price for the stake, something which has now been initiated by Fox.
Flutter and Fox work together in the US on the Fox Bet sports betting brand, which has struggled so far to get anywhere close to FanDuel’s impact and market share.
Confirming the instigation of arbitration proceedings by Fox, Flutter said: “Fox’s position that it has a right to acquire an 18.6% interest in FanDuel based on an $11.2 billion valuation is incorrect.
“It would represent a windfall to Fox compared to the fair market valuation as of July 2021, to which the parties had previously agreed.
“Flutter will not allow Fox’s filing, which is without merit, to distract from its business and will vigorously defend its position in the arbitration,” Flutter added.
One factor which may complicate arbitration proceedings is Flutter’s potential IPO of the FanDuel business in the US, a strategic move currently being considered by the firm’s board of directors to increase value in the asset.
FanDuel’s closest rival, DraftKings, went public in April 2020 via a reverse merger with a SPAC and has since seen its value skyrocket by more than 300% to reach a market cap of more than $25bn.
Protracted mediation proceedings could potentially jeopardise an IPO and sour the relationship between the two US sports betting partners.