Flutter Entertainment will become the sole owner of mobile sports betting titan FanDuel once it buys the remaining 5% of stock owned by Boyd Gaming for a reported $1.76 billion.
Flutter Takes a Flier on FanDuel
Flutter Entertainment took a flier on FanDuel in 2018 and began increasing its shares as the years progressed. The strategy proved to be perspicacious, as FanDuel has since become the leading mobile sportsbook in the U.S. market, and Flutter wound up owning 95% of those shares.
However, a recent deal struck with Boyd Gaming will see Flutter own 100% of FanDuel after agreeing to pay Boyd $1.76 billion for its shares. The sale provides FanDuel with a valuation of $31 billion, and it is seen as a win-win for both companies.
Flutter CEO Peter Jackson said, “Our acquisition of FanDuel in 2018 is one of the most transformational events in our group’s history, with its natural competitive advantages combined with access to Flutter Edge capabilities driving impressive growth to become the well-established and clear leader in US online sports betting and iGaming.”
“I am really pleased to drive future value for our shareholders by increasing our ownership of FanDuel to 100%,” Jackson added.
Boyd Gaming Sees Strategic Benefits
As for Boyd Gaming, the influx of capital from the deal will allow it to reduce debt, with Keith Smith, president and chief executive officer of Boyd, saying, “This transaction unlocks the tremendous unrealized value that our investment in FanDuel has created for our company.
“As a result, we are in a significantly stronger financial position to continue executing our strategy of investing in our properties, pursuing growth opportunities, returning capital to our shareholders, and maintaining a strong balance sheet.”
Fox on the Hunt
Flutter will have an unwelcome partner joining them soon at the FanDuel table, as Fox is expected to exercise its option to purchase 18.6% of FanDuel stock due to its deal with Flutter to buy the Stars Group in 2019. Although this will reduce the number of shares Flutter has in FanDuel, its most recent purchase will drive up the value of the stock.
Fox is expected to pay somewhere between $4.5 billion and $6.5 billion for the stock, depending on the valuation of FanDuel at the time of the purchase. However, it only has until December 3, 2030, to consummate the purchase. However, due to a 5% escalator clause in the contract, Fox is expected to make the deal sooner rather than later.
It should be noted that Fox owns 2.4% of Flutter Entertainment, and once they do exercise their option in FanDuel, Fox will need to be licensed as a gaming operator after owning nearly one-fifth of FanDuel.
At the Goldman Sachs Communacopia & Technology Conference last September, Fox Corporation CEO Lachlan Murdoch stated, “To fully monetize the option, we need to be licensed as a gaming operator, even with only 18.6%. And so, we’ve started that process with state regulators to begin the gaming licensing approval.”
Murdoch previously stated he and his team are “tremendous believers in sports betting”; thus, this deal makes sense both from a financial standpoint and as part of Fox’s corporate culture.
