British and Irish gambling company Flutter Entertainment has reportedly agreed a deal worth staggering $4.2 billion that will see it acquire a further 37.2% stake in the American sportsbook operator FanDuel Group, exercising its option to buy further stake in the company ahead of schedule.
Shares in the company jumped in Dublin trade after the deal was announced, as the stock price was 6% higher at the close of business. Flutter said it will raise $1.47 billion in equity to partly fund the purchase and will offer US broadcast company FOX Sports an option to buy 18.5% of FanDuel at fair market value in July 2021.
The London firm that was known as Paddy Power Betfair before undergoing a May 2020 rebranding already held a 61% stake in the FanDuel group. The price paid for the 61% shares was $0.77 billion in May 2018, and this time around the price is much higher as Flutter acquires additional stake to end up controlling 98.2% of the FanDuel shares.
The companies that hold the 37.2% stake are a consortium under the name Fastball Holdings, which consists of Google Ventures, KKR and Company Incorporated, Verizon Ventures, NBC Sports Group, Shamrock Ventures and Comcast Ventures.
The deal values FanDuel Group at around $11.2 billion and will see Fastball Holdings receive $2.1 billion in cash, alongside a 7% shareholding in its own business.
FanDuel has lots of potential as the front runner in the emerging US market, as it’s already offering online sports betting to players in the US states of New Jersey, Pennsylvania, West Virginia and Indiana.
Despite only scratching the surface of the US market potential, FanDuel has already grown to become a huge company. Peter Jackson, Chief Executive Officer for Flutter Entertainment, reportedly declared ould well be present in jurisdictions containing roughly one-third of the nation’s population by the end of 2021.
He further reinforced his case by stating that “such an enterprise would be equivalent to the size of our businesses in Australia, the United Kingdom and Ireland combined”.