According to reports, Flutter Entertainment might postpone the eagerly awaited separation of its FanDuel company until next year.
Earlier this year, the Betfair parent announced that it is considering putting FanDuel on the stock exchange, as creditors urged the UK-based gambling business to unlock investor value and benefit on higher multiples being offered to sports betting providers in the US.
Flutter declared the resignation of FanDuel CEO Matt King two months ago, with the parent company stating at the time that King’s departure might influence the timeline of a share offering. Flutter, on the other hand, stated that it would continue to consider that possibility but did not provide a timeline.
King is expected to leave in the next few weeks, with Flutter hoping to have a replacement in place by the autumn.
Flutter’s Fox Issue
According to unnamed sources, Flutter plans to delay the FanDuel spinoff until 2022. The business has yet to make an official statement to that effect, but it is conceivable that legal wrangling with Fox Corp. (NASDAQ: FOXA) is also playing a role in the decision to delay the initial public offering.
In late March, the media company filed a lawsuit against Flutter in New York’s Judicial Arbitration and Mediation Services (JAMS) over the pricing of an 18.6 percent stake in FanDuel that it has the rights to buy. Flutter purchased its first interest in FanDuel three years ago, increasing its control to 95 percent in a $4.175 billion agreement with Fastball Holdings LLC last December.
While Flutter previously said that it intended to respect Fox’s rights to acquire 18.6 percent of FanDuel, the seller wants to price what it feels is fair market value, while the buyer wants pricing comparable to what Fastball received.
Investors may be Dissatisfied
It is unclear how much of FanDuel Flutter would be sold to public investors, but insiders told The Telegraph that the sale would value the sportsbook operator and daily fantasy sports (DFS) behemoth at $18 billion.
That makes sense, given that Flutter investors are screaming for a DraftKings style value. On July 9, DraftKings, FanDuel’s closest competitor in the United States, had a market valuation of $19.35 billion.
However, there is space for FanDuel to require a higher market valuation if it goes public. According to recent estimates, the firm owns nearly half of the US online sports betting industry, placing it ahead of DraftKings.There might be something to Flutter’s cautious attitude to the FanDuel split, given that DraftKings shares are down 34% from their March peaks and a spate of internet gaming firms are suffering.
FanDuel is owned by Flutter, which also runs Paddy Power and PokerStars. Boyd Gaming, located in Las Vegas, owns the remaining 5%.