Paddy Power Betfair Acquires 61% of FanDuel Shares
After Paddy Power Betfair confirmed it was interested in buying an American daily fantasy sports company FanDuel, the renowned bookmaker has finally made a concrete move on this matter.
According to information coming from the other side of the Atlantic, the deal was confirmed on the London market this week.
FanDuel is the second-largest daily fantasy sports operator in the United States, with 7 million registered users across 40 states, and along with DraftKings represents the two biggest DFS companies in the country.
Increasing the Market Footprint
Following the acquisition, FanDuel will become a part of the company which is already operating in the US. No doubt the merger will help Paddy Power Betfair expand its operations in the States, whose market offers a lot of possibility following the Supreme Court’s decision to repeal PASPA and thus removing the federal ban on sports betting, which had been in power for more than two and a half decades.
Under the provisions of the new deal, Paddy Power Betfair pay $158 million in cash for FanDuel, gaining 61% of the company’s shares, while the remaining 39% will be in possession of FanDuel’s investors. The two sides have arranged a mechanism which will allow Paddy Power Betfair to increase its share to 80% after three years, with the option to become the sole owner of FanDuel after five years.
FanDuel ended 2017 with revenue of $124 million and claims it currently has a market share of more than 40%.
The British bookmaker’s biggest source of income in the United States is horse racing television and betting network TVG, which broadcasts live races from over 150 premier race tracks across the country, and offers customers in 35 states the possibility to place online and telephone horse racing bets.
In addition to this, the brand runs a casino, available only in New Jersey, and another daily fantasy sports business, Draft DFS.
A New Era for the Company
Paddy Power Betfair will also clear FanDuel’s debts, which stand at more than $76 million, and will be required to submit working capital for the new business. The transaction should be completed in the third quarter of this year once, following the necessary regulatory approval.
Commenting on this important move, Peter Jackson, Chief Executive Officer at Paddy Power said this combination would create the industry’s largest online business in the United States, with a large sports-focused customer base and an extensive nationwide footprint.
He also added the company was extremely excited to be adding FanDuel to its portfolio of popular sports betting brands.
According to Matt King, FanDuel’s Chief Executive Officer, the deal will create „the leading gaming destination for sports fans in the US“. King also stated that FanDuel and Betfair US shared an enthusiasm for innovation and, as a result of today’s announcement, would be prepared to lead the charge into the US sports betting market
The market itself could be a very lucrative one, with experts estimating it could bring as much as $13 billion by 2019.
- iGaming Business: http://www.igamingbusiness.com/news/paddy-power-betfair-buys-fanduel-us-wagering-push
- Variety: https://variety.com/2018/digital/news/fanduel-paddy-power-betfair-acquisition-1202819754/
- Financial Times: https://www.ft.com/content/2bbcabfa-5ea6-11e8-ad91-e01af256df68
- Bloomberg: https://www.bloomberg.com/news/articles/2018-05-23/paddy-power-to-combine-u-s-unit-with-fanduel-after-court-ruling