Fox Corp. has filed suit against Flutter, owner of the FanDuel sportsbook brand. Flutter acquired an additional 37.2 percent of FanDuel in December, giving the U.K.-based company 95 percent of the shares.
Fox agreed to purchase an 18.6 percent stake in FanDuel in December, but Fox wants to pay the same price point Flutter paid for its share of FanDuel in December, based on an $11.2 billion valuation. Fox is set to exercise its purchase option of FanDuel in July.
But Flutter says FanDuel is worth more than that based on its market share and wants Fox to pay for that market share.
Confused yet? Oh, Flutter bought its 37.2 percent stake from a company named Fastball.
Adding to the confusion is Flutter’s possible move to do an initial public offering for FanDuel. Whatever the price is for the IPO could influence the ultimate price for Fox’s purchase of its share of FanDuel from Flutter.
“Fox Corp. has filed suit against Flutter to enforce its rights to acquire an 18.6 percent ownership interest in FanDuel Group for the same price that Flutter paid for that interest in December 2020,” a Fox spokesperson said in a statement given to CNBC.
It’s unclear if the suit will affect the IPO decision.
In its head to head competition with rival DraftKings, FanDuel has come out on top in Illinois, New Jersey and Pennsylvania. No wonder Flutter said FanDuel’s value to Fox will be at a premium.
Flutter Chief Executive Peter Jackson said in March during his company’s earnings conference call that Fox would have to pay fair market value for its 18.6 percent stake in July 2021.
“To be clear on the valuation, Fox will have to pay the fair market value, which is different from the negotiated price agreed between Flutter and Fastball, which reflected the specific circumstances that Fastball found itself in,” Jackson said.
Confused?
The valuation will be carried out in the same manner that would have occurred had Fastball still owned the stake. Fox has accused Flutter of making up the 2021 fair market value clause after the fact. In other words, Fox says no such wording exists in the contract.
Alas, another factor could add to the confusion.
Flutter owns the Stars Group, which owns PokerStars and Fox Bet. Fox Bet competed with FanDuel for bettors. But promoting Fox Bet takes business away from FanDuel.
Fox has a 10-year option to buy half of the Stars Group’s U.S. business. In fact, Fox wants Flutter to include The Stars Group in a FanDuel IPO by formally merging the Flutter divisions.
