Murdoch sues Flutter in bid to raise FanDuel stake
FanDuel: originally from Edinburgh
FanDuel, the fantasy sports business which originated in Edinburgh, is at the centre of a legal battle between its owner Flutter Entertainment and the Murdoch empire.
Flutter, which also owns bookmakers Betfair and Paddy Power, has been sued by Rupert Murdoch’s Fox Corporation which is demanding an option to buy into FanDuel based on its valuation in December – rather than its current value.
Flutter paid $4.2bn in a deal that valued FanDuel at $11.5bn and the Murdochs want to raise their stake to 18.6% based on the same terms.
The price of Fox’s option could be determined by an initial public offering (IPO) for a proportion of FanDuel, which the company said last month that it is considering.
Flutter says Fox’s legal filing “is without merit” and has stated that it will “vigorously defend its position”.
It argues that Fox must pay “fair market value” to exercise the option in July.
It says that buying at December’s valuation “would represent a windfall to Fox compared to the fair market valuation as of July 2021, to which the parties had previously agreed”.
Analysts say that if there is no IPO by July, then investment banks will be consulted to determine fair value.
This is likely to be higher than the $25bn market cap achieved by FanDuel’s smaller rival DraftKings on its stock market debut. It has since neared a market valuation of $29bn.
The latest movements around the ownership of FanDuel are bound to interest the four creators of the company who are pursuing a legal action claiming it was undervalued, leaving them with nothing, when the company was sold to Paddy Power in 2018.