Shares in Paddy Power-owner Flutter surge 6% as it bets on €3.5bn purchase of US bookmaker

The Stars takeover gave Flutter ownership of Fox Bet, a Stars unit that has an exclusive license to use trademarks of Rupert Murdoch’s Fox Corp.

Paddy Power-owner Flutter Entertainment said it’s buying most of the remaining shares in FanDuel for $4.2bn (€3.5bn) to get almost full ownership of the fast-growing US bookmaker. Flutter shares rose as much as 14% to a record high.

Flutter will pay almost $2.1bn in cash and issue about 11.7 million new Flutter shares to FanDuuel-owner Fastball under the conditional agreement, taking its stake in FanDuel to 95% from almost 58%. The deal gives FanDuel an estimated enterprise value of $11.2bn. 

The Dublin-based firm has leapfrogged competitors like GVC in market value after buying Canada’s The Stars Group earlier this year. Deals have been spurred by the legalisation of sports betting in the US in 2018.  

Competition is intensifying as companies such as BetMGM and Barstool Sports compete with FanDuel and its main rival DraftKings to capture surging demand. The acquisition from Fastball “leaves Flutter with 95% of its prize asset, and clears up uncertainty that has overhung the shares,” Jefferies analyst James Wheatcroft said. 

The Stars takeover gave Flutter ownership of Fox Bet, a Stars unit that has an exclusive license to use trademarks of Rupert Murdoch’s Fox Corp. for up to 25 years and spends money on Fox advertising. That commercial partnership brought Fox a stake of almost 5% in Stars, plus an option to acquire half of Stars’ US operations. Fox now has 2.6% of Flutter, and said it will take part in the capital raising announced on Thursday to maintain its stake in the Irish company.

Fox has also kept options to acquire more Flutter shares and options regarding Fox Bet, Flutter chief Peter Jackson said. “The first person I rang to tell about this deal on a confidential basis was Lachlan Murdoch,” the CEO of Fox, Jackson said. “Fox are an incredibly important media partner.” Bloomberg