Gambling giant Flutter is buying another 37.2% of FanDuel for $4.18 billion, a deal that accelerates a previously determined investment timeline and values the gaming brand at $11.22 billion.
Flutter, which announced the transaction on Thursday, will own 95% of FanDuel once the deal closes. It will fund part of the acquisition with $2.02 billion in cash and the rest by issuing consideration shares to the company’s early private equity investors.
Flutter shares jumped as much as 13.3% on the London Stock Exchange following the announcement.
Flutter first invested in FanDuel back in 2018, shortly before the U.S. Supreme Court struck down a federal ban on sports betting. It took a 57.8% stake then at a roughly $558 million valuation, with plans to buy the rest in two separate tranches over the next few years. Thursday’s transaction, which Flutter described as “a discount to the intrinsic fair value,” speeds up that timeline.
“Flutter’s initial acquisition of a controlling stake in FanDuel in 2018 has been transformational for the shape of the Group,” Flutter CEO Peter Jackson said in a statement. “Our number one position in the crucial U.S. market is built on many of the assets we acquired through that transaction, supported by the broader Group’s capabilities. Our intention has always been to increase our stake in the business and I’m delighted to be able to do so earlier than originally planned and at a discount to its closest peer.”
Flutter’s brands include Paddy Power, Betfair, Sky Bet, and FoxBet, which it acquired through its acquisition of the Stars Group. As part of that combination, FanDuel’s early investors received an economic interest in FoxBet, which will be terminated as part of Thursday’s deal. FOX Corp. has an ownership stake in Flutter, and Fox Sports will retain its option to purchase 18.5% of FanDuel in July 2021.
Under Flutter’s part-ownership, FanDuel has become one of the dominant brands in online U.S. sports betting. It holds 33.4% of the U.S. market, according to market research firm Eilers & Krejcik, more than any other company.
The final 5% of FanDuel is owned by Boyd Interactive Gaming, which acquired it as part of a market access partnership.
