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The general view of the atmosphere at the FanDuel Fantasy Golf Classic in New York.
Michael Loccisano / Getty Images for FanDuel
Flutter Entertainment
has reached an agreement to increase its stake in US fantasy sports and online betting company FanDuel. Analysts at
Morgan stanley
thinks the assessment might be bad news for
DraftKings.
As part of the deal, which is subject to shareholder approval, Flutter (ticker: FLTR) would acquire Fastball Holdings’ 37.2% stake in FanDuel for approximately $ 4.18 billion. Fastball is said to receive about $ 2.09 billion in cash and about 11.7 million new shares from Flutter.
Flutter plans to raise around £ 1.1. billion ($ 1.48 billion), by selling stocks. Fox CEO Lachlan Murdoch said in a press release that the company, which owns a portion of Flutter, will participate in the fundraiser. Murdoch is co-chairman of News Corp, which owns Dow Jones, the publisher of Barron’s.
“Maintaining our interest in Flutter signifies our long-term commitment to Flutter and our continued confidence in management’s ability to execute in the face of the rapidly growing US opportunity,” said Murdoch. “FOX audiences have been very engaged with the free play and betting content, and we are delighted to provide them with access to market leading Flutter Stable products from US brands.
The deal involves an enterprise value for FanDuel of $ 11.2 billion and would increase Flutter’s stake to 95%. That’s a cut for FanDuel’s closest peer, DraftKings (DKNG), which has an enterprise value of around $ 20 billion.
Boyd Gaming
(BYD) owns the remaining 5% of FanDuel.
Morgan Stanley analysts Thomas Allen and Ed Young said they believe FanDuel’s valuation “is a negative reading” for DraftKings stock, highlighting FanDuel’s current market share leadership in US sports betting .
Certain nuances may have lowered the valuation, analysts noted.
Flutter owns Fox Bet, an online sports betting app that partners with Fox Sports and originally belonged to the Stars group, which merged with Flutter earlier this year. As part of the deal, Fastball received an economic interest in Fox Bet that would have paid him 11% of the Fox Bet valuation hike from May to July 2023. As part of the new deal, that economic interest is terminated.
Investors appeared to applaud the deal. Flutter’s American Depositary shares jumped 7.4% to $ 95.94 on Thursday morning, while DraftKings shares were down 0.4%. the
S&P 500
the index rose 0.3%.
Write to Connor Smith at [email protected]
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