Good morning. In breaking news overnight, the arbitration tribunal has found in favor of Flutter and has found that FOX must pay at least $3.72bn for its option to acquire an 18.6% stake in FanDuel.

Pay the man.

A big win for Flutter

Peter Jackson, CEO at Flutter, said the decision late yesterday from the arbitration tribunal “vindicates” the company’s confidence in its $20bn valuation of FanDuel.

The findings:

• The exercise price of FOX Corporation’s option to acquire 18.6% of FanDuel is based on a FanDuel valuation of $20bn.

• This is based on fair market value as of December 2020, the date on which Flutter acquired a 37.2% stake from Fastball for an implied FanDuel valuation of $11.2bn

• The exercise price is subject to a 5% annual compounding carrying value adjustment up to the date of any potential exercise by FOX prior to December 2030.

• As of today, this equates to a valuation for FanDuel of $22bn and a cost of $4.1bn for FOX to acquire an 18.6% stake.

Peter Jackson, CEO Flutter: “Today’s 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, should they wish to do so."

FOX fail: FOX has also lost its claim that Flutter “failed to provide commercially reasonable resources” to the running of FOX Bet. The tribunal has denied the claim in its entirety and has ruled in favor of Flutter.

• According to the press release from Flutter, it means FOX continues to retain the right to acquire up to 50% of TSG US which it can exercise “only if licensed”. 

• In the event FOX does not get licensed and exercise its option in relation to TSG US, both parties have a right to terminate their agreement in relation to FOX Bet in August 2023. 

• Should either party do so, this would result in a termination of the FOX Bet business. 

• In this event, Flutter would retain ownership of PokerStars US and Super6, while the use of the FOX Bet brand name would reside with FOX.

All that’s left is… The remaining matter to be determined by the tribunal is where and under what conditions FOX would be entitled to participate in a FanDuel IPO.  

• Flutter has agreed that it will not proceed with any potential IPO “until the tribunal has resolved this remaining matter or both parties have reached an agreement on the matter”. 

• A binding decision from the arbitrator on this point is expected in early 2023.

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See you on Monday: E+M will have more on Monday where we also take a look at a tumultuous day on the markets for DraftKings where its share price tumbled over 27% on the day it released its Q3 earnings.

😱DraftKings drops a quarter of its value

Calendar

• Nov 7: Full House Resorts

• Nov 8: IGT, Everi, AGS, Playtika

• Nov 9: Flutter Entertainment, GiG, Light & Wonder, NeoGames

• Nov 10: Genius Sports, Acroud, Endeavor

Contact

• Scott Longley scott@clearconcisemedia.com

• Jake Pollard jake@openmediaservices.com