Arbitrator Rules Fox Can Buy an 18.7% Stake in FanDuel, Based on $20bn Valuation

  • Fox argued it could buy the stake based on an $11.2bn valuation, but Flutter disagreed
  • The arbitrator ruled that the price would be based on a December 2020 valuation of $20m
  • The parties disagree on whether or not a FanDuel IPO needs consent from Fox or the arbitrator
  • Fox got the option to buy the FanDuel stake following Flutter’s merger with The Stars Group
FanDuel logo on a smartphone
A New York arbitrator has ruled that Fox can purchase an 18.6% stake in FanDuel from Flutter Entertainment based on a $20bn valuation. [Image: Shutterstock.com]

Settling on a valuation figure

Fox Corporation has won the battle to be able to purchase an 18.6% stake in FanDuel from the US sportsbook’s parent company based on a December 2020 valuation. A New York arbitrator ruled on Friday that Fox is entitled to exercise its right to purchase the stake, but the price for doing so would be at least $4.1bn.

believed that the acquisition price for Fox would be based on fair current market value in July 2021

Fox had argued that the price should be based on the $11.2bn valuation from when Flutter Entertainment bought a 37% stake in FanDuel in December 2020. Flutter believed that the acquisition price for Fox would be based on fair current market value in July 2021.

The arbitrator ended up agreeing that the price would be based on the December 2020 market value but stated that the true valuation at the time was $20bn. Numerous factors were taken into consideration to come up with the valuation, including a comparison with FanDuel’s chief rival DraftKings.

Still some uncertainty

Fox issued a statement following the Judicial Arbitration and Mediation Services ruling, welcoming “the fair and favorable outcome.” It emphasized that it is under no obligation to go through with exercising its option to buy the FanDuel stake. The option is valid for ten years, ending in December 2030. The arbitrator has implemented a 5% annual escalator to the buying price and Fox would need to pay all cash to acquire the stake.

provides certainty on what it would cost Fox to buy into this business”

Flutter also released a statement on the ruling, with CEO Peter Jackson saying that the ruling “vindicates the confidence we had in our position on this matter and provides certainty on what it would cost Fox to buy into this business.”

Fox believes that the ruling means that Flutter will not be able to proceed with an initial public offering (IPO) for FanDuel without getting the green light from the arbitrator or consent from Fox. Flutter does not agree with this view and believes that no such consent would be necessary to proceed with taking FanDuel public.

A complex situation

There has been ongoing legal action between Fox and Flutter regarding this issue for more than a year, initiated by Fox in April 2021. As part of the dispute, Fox Sports threatened to ban all FanDuel ads from its network.

FanDuel is the market leader in the US sports betting; Flutter Entertainment owns 95% of the operator.

Fox had a 5% stake in The Stars Group before Stars merged with Flutter in May 2020 and held a ten-year option to buy half of The Stars Group’s US business. Following Flutter’s purchase of The Stars Group, Fox received a 2.6% stake in Flutter, as well as the option to buy an 18.6% stake in FanDuel.