Fox in legal dispute with Flutter over FanDuel stake
Flutter Entertainment confirmed on Wednesday that it is in a legal dispute with Fox Corp over its option to buy an 18.6% stake in US sports betting group FanDuel.
Murdoch-owned Fox wants to buy the stake at an $11.2bn valuation, which is the value that was set when Flutter bought a 37.2% stake from Fastball in December.
However, Flutter said Fox's position that it has a right to acquire the interest in FanDuel based on that valuation is "incorrect".
It noted that under the terms of its agreement with Fox, an arbitration mechanism was put in place at the time of The Stars Group merger announcement "to be conducted in the event of a disagreement between the two parties relating to the option".
"That now being the case, such a process has been initiated by Fox," it said.
The $11.2bn valuation "would represent a windfall to Fox compared to the fair market valuation as of July 2021, to which the parties had previously agreed", Flutter said.
"Flutter will not allow Fox's filing, which is without merit, to distract from its business and will vigorously defend its position in the arbitration."
Traders also said the stock was under pressure after around 2.3m shares in the company were placed at £153 each. The placing was linked to Fastball, with Goldman Sachs acting as bookrunner.
Broker Numis said market value for the FanDuel stake is likely to be a multiple of the implied $11bn paid by Flutter for its minority stake and arguably more than $25bn implied by Draft Kings' current valuation.
"Arguably Flutter's potential US IPO would have been the mechanism to support this valuation," it said. "Fox is reportedly prepared to aggressively promote Fox Bet, its own betting app in competition with FanDuel."