Flutter, the gambling company behind Sky Bet and Paddy Power, plans to raise £1.1bn from shareholders to increase its stake to 95 per cent in the US daily fantasy sports company FanDuel.
The group intends to buy out the 37 per cent of FanDuel owned by Fastball Holdings, a consortium of investors led by the private equity group KKR, for $4.2bn, Flutter said on Thursday. The move is ahead of its initial agreement to buy the stake in July 2023.
The remaining 5 per cent will remain under the control of the casino company Boyd Gaming.
The transaction will be funded by roughly $2.1bn in cash to Fastball with the private equity group receiving the remainder in Flutter shares.
The deal is a reflection of the speed of growth in the US gambling market since sports betting was made legal at a federal level in 2018, following a Supreme Court judgment in 2018.
Valuations of companies such as FanDuel, a market leader in many states, have risen this year. Flutter shares rose as much as 14 per cent in early afternoon trade on the news.
Fox Corporation, under the guidance of Lachlan Murdoch, will invest in the share placing, increasing its investment in Flutter following the company’s £10bn acquisition last year of Stars Group, with which Fox has a gambling partnership.
Peter Jackson, Flutter’s chief executive, said that the betting group’s original acquisition of FanDuel had been “transformational”.
“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,” he said.
Source: Financial Times
