Flutter Entertainment has secured its majority shareholding in US wagering subsidiary FanDuel after agreeing to acquire the 37.2% interest held by the ‘Fastball’ consortium for $4.17 billion (£3.1bn).
The transaction will see Flutter increase its majority shareholding in FanDuel from 58% to 95% – as the FTSE100 operator triggers an early buyout clause to increase its interest in its flagship US operator.
Fastball, the consortium formed by FanDuel enterprise investors, will depart the company securing a $2.08 billion in cash and a further 11.7 million in Flutter Plc shares.
Flutter stated that it had agreed to purchase Fastball’s shareholding at an ‘intrinsic fair market value’, allowing it to bypass original deal terms that would have seen Flutter acquire its remaining stake in two tranches set for July 2021 and 2023.
“Flutter’s initial acquisition of a controlling stake in FanDuel in 2018 has been transformational for the shape of the Group, ” said Flutter CEO Peter Jackson.
“Our number one position in the crucial US 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.”
Following the buyout, Fastball will no longer maintain an economic interest in Flutter’s ‘FOX Bet’ strategic joint venture with US sports broadcaster FOX Sports – which maintains the exclusive rights to acquire 20% of the Flutter US business in 2021, strengthening the firm’s strategic alliance.
Fox Corporation, the holding company of Fox Sports, backed Flutter’s initiative, stating that its partner had simplified stakeholder arrangements and removed considerable uncertainty from its US market objectives.
“We are delighted to participate in this capital raising. Maintaining our ownership stake in Flutter signifies our long-term commitment to Flutter, and ongoing confidence in management’s ability to execute against the fast-growing US opportunity,” said Lachlan Murdoch, Executive Chairman and CEO of Fox Corporation
“FOX’s audiences have proven to be highly engaged with free to play and wagering content, and we are excited to offer them access to products from Flutter’s market-leading stable of US brands.”
The transaction will be primarily funded by ‘cash on balance sheet’, with the FTSE firm issuing a new equity placing to raise approximately £1.1 billion.
Following the completion of the buyout, which is yet to be approved by shareholders, Flutter expects its financial leverage at the end of 2020 to be less than 3.0x Adjusted EBITDA.