A massive, tangled web of negotiations involving multiple companies now has Fox Corp. crying foul. The media giant, which is also behind the FOX Bet sports gambling platform, and Flutter Entertainment are at odds over a piece of FanDuel that has now led to Fox Corp. turning to arbitration to find resolution. At issue is the value of a stake in FanDuel, of which Fox Corp. is trying to pick up 18.6% through an agreement made between it and Flutter.
Fox Unhappy with Flutter over FanDuel Valuation
Flutter owns about 95% of FanDuel after it purchased a 37.2% stake controlled by Fastball Holdings last December. To help secure that purchase, the company enlisted the services of Fox Corp. and, in return, gave it an option to buy 18.6% of the sports gambling platform. Fox Corp. is ready to cash in on that option but isn’t happy with how Flutter is trying to value the option.
Flutter is in the process of trying to spin off FanDuel ahead of an anticipated public offering and, if the success of DraftKings’ entry onto the stock market is an indication, the value of the company is going to skyrocket. Flutter CEO Peter Jackson asserted last month that, if Fox Corp. wants to exercise its option this July as planned, it will have to pay “fair market value,” not the value of the company at the time Flutter completed its deal with Fastball.
According to CNBC, this caught Fox Corp. off guard, leading it to file a complaint with the Judicial Arbitration and Mediation Services (JAMS) in New York. The company argues that the original agreement with Flutter did not include the fair market value clause and that Flutter is making things up as it goes along. If that original agreement contains language to back up Fox Corp., Flutter could have a difficult time trying to take FanDuel public.
Fox-Flutter-Stars Tie-ups Add Confusion
Fox Corp. and Flutter are more than two companies working in the same industry. Fox Corp. sold Sky Bet to The Stars Group (TSG) in 2018 and Flutter purchased TSG, which owned FOX Bet at the time, last year. Fox Corp. has an option to acquire 50% of the US operations of TSG, which also owns PokerStars, and has been trying to convince Flutter into combining FOX Bet, FanDuel, and PokerStars before spinning off the larger ensemble.
Should Flutter decide to merge TSG and FanDuel, Fox wants a piece of the action. It argues that its 50% option agreement is separate from any movement related to FanDuel and is undoubtedly going to push for more control over how new deals or public offerings are handled. For now, it will first have to find support from JAMS before it lays claim to any other stakes.