Leading sports betting and gaming group Flutter Entertainment announced yesterday it entered into a conditional agreement to acquire the 37.2% stake in FanDuel held by Fastball Holdings, for $4.175 billion, subject to approval by its shareholders. Flutter is expected to convene an extraordinary general meeting before the year end.
Flutter Targets 95% Stake in FanDuel
The agreement with Fastball which stake at FanDuel is valued at £133.50 per share involves a combined payment of $2.088 billion in cash and 11.7 million new Flutter shares issued directly to Fastball. Upon completion of the transaction, Flutter will hold 95% of daily fantasy sports (DFS) and sports betting brand FanDuel, with the remaining 5% owned by Boyd Gaming.
The deal affects another US-facing operator and brand in Flutter group, Fox Bet, as it terminates any Fastball interests in the operator, Peter Jackson, CEO of Flutter explained. The transaction agreed now was initially envisioned in May 2018 as part of the original purchase of FanDuel, when a mechanism for two tranches in July 2021 and July 2023 was put in place to facilitate the sale of Fastball’s 37.2% stake.
The initial timetable has now been accelerated to avoid further uncertainty and complexity for the business, Peter Jackson outlined, pointing out that Fastball receives a considerable return on its investment in FanDuel. In July 2021, Fox Sports will be offered the option to acquire 18.5% in FanDuel at fair market value and under the same terms and valuation that would have applied to Fastball had the timetable not been accelerated.
$1.48B Ordinary Share Placement
In another release yesterday, Flutter announced a proposed placement of new ordinary shares priced at €0.09 to raise approximately £1.1 billion ($1.48 billion). The placement aimed to satisfy the cash element of the payment to Fastball will be conducted through an accelerated bookbuild which will be launched immediately following the announcement and will be made available to new and existing eligible institutional investors. Goldman Sachs International and J & E Davy will act as joint global coordinators and joint book-runners for the placement.
According to further details released by Flutter today, approximately 8 million new ordinary shares in the company have been placed by Goldman Sachs International and J&E Davy at a price of £140.00 per placing share, or €155.44 for those institutional investors who have elected to settle in the single European currency.
The new shares represent approximately 5.2% of all issued share capital prior to the placement, and the placing price is at a 3.4% premium compared to the intra-day price at the time of the launch and at a 2.1% discount to the daily close December 3, 2020 price.
All placing shares, when fully paid, will rank as pari passu in all respects with the existing ordinary shares of Flutter Entertainment, including bearing dividends and other declared distributions rights, related to ordinary shares after the date of the issue for the placing shares.
The capital raised by the placement does not cover in full the cash element of the payment to Fastball, hence its partner Fox Corporation committed to invest further in a strategic partner investment as part of the ordinary share placement.