FanDuel Spinoff set to be postponed until next year

Posted: July 11, 2021, 8:43 a.m.

Last update on: July 11, 2021, 8:43 a.m.

Flutter Entertainment (OTC: PDYPY) is reportedly delaying the highly anticipated spin-off of its FanDuel business until next year.

The impact of FanDuel
FanDuel sports betting at the Meadowlands. Flutter Entertainment is rumored to be delaying a spin-off from the American sports betting giant. (Picture: North Jersey)

Earlier this year, Betfair’s parent company confirmed it was considering a public listing of FanDuel as investors urged the UK-based games company to unleash shareholder value and capitalize on the high multiples awarded to operators. of sports betting in the United States.

Two months ago, Flutter announced the departure of FanDuel CEO Matt King with the parent company, saying that at that point King would leave the company would affect the timing of the listing of shares. However, Flutter said he would continue to consider this option and did not go into details regarding the timeline.

King is expected to leave in the next few weeks with Flutter aiming to have his successor in place by the fall.

The Flutter Fox Problem

Unidentified sources said The telegraph that Flutter plans to delay the FanDuel spin-off until 2022. The company has yet to make a formal announcement to this effect, but it is possible that legal disputes with Fox Corp. (NASDAQ: FOXA) are also factored into the decision to postpone the first public offering (IPO).

At the end of March, the media company filed a complaint against Flutter with New York’s Judicial Arbitration and Mediation Services (JAMS) regarding the price of an 18.6% slice of FanDuel that it is entitled to. ‘to acquire. Flutter bought his initial stake in FanDuel three years ago, increasing his stake in the sportsbook company to 95% last December in a $ 4.175 billion deal with Fastball Holdings LLC.

Fox insiders believe that with the ongoing legal dispute Flutter will not be able to float FanDuel – a claim that (CEO Peter) Jackson has denied, ”according to The telegraph.

While Flutter previously said he intends to honor Fox’s rights to acquire 18.6% of FanDuel, the seller wants to charge what he believes is fair market value while the buyer wants a price consistent with what was paid to Fastball.

Investors might be disappointed

It is not yet known how many FanDuel Flutter will sell to public investors, but sources have said The telegraph the deal would value the sports betting operator and daily fantasy sports giant (DFS) at $ 18 billion.

This is reasonable based on Flutter investors claiming a DraftKings-type valuation (NASDAQ: DKNG). DraftKings, FanDuel’s closest rival in the United States, closed on July 9 with a market cap of $ 19.35 billion.

However, FanDuel has leeway to potentially achieve a higher market value when it goes public. Recent estimates indicate that the company controls roughly half of the US online sports betting market, putting it ahead of DraftKings. There might be something for Flutter to take a narrow approach to the FanDuel spin-off, as DraftKings shares are down 34% from March highs and many online gaming stocks are struggling.

Flutter, who also owns Paddy Power and PokerStars, controls 95 percent of FanDuel. Boyd Gaming, based in Las Vegas, owns the remaining five percent.

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