TIDMFLTR
RNS Number : 4528F
Flutter Entertainment PLC
07 November 2022
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014.
7 November 2022
Flutter Entertainment plc ("Flutter")
FOX arbitration update
Arbitrator finds in favour of Flutter and values FanDuel at
$20bn as at December 2020 using fair market value
Flutter is pleased to announce that the outcome of the
arbitration confirms:
-- The exercise price of FOX Corporation's ("FOX") option to
acquire 18.6% of FanDuel Group ("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 Holdings
LLC ("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
Arbitration Ruling
Flutter's relationship with FOX is subject to a binding
arbitration mechanism where the parties may resolve any
disagreements.
1. FOX Option to acquire an 18.6% stake in FanDuel
On 7 April 2021, FOX initiated an arbitration process with
respect to a legal dispute over the terms of FOX's option to
acquire an 18.6% stake in FanDuel (the "Option") and related
issues.
The arbitration tribunal has determined that the price payable
for the Option is based on FanDuel's fair market value as of 3
December 2020 , the date on which Flutter announced the acquisition
of Fastball's 37.2% stake in FanDuel (transaction details here ).
The tribunal has determined the fair market value of FanDuel as of
December 2020 amounts to $20bn. This contrasts with an implied
$11.2bn valuation for FanDuel when Flutter acquired the stake from
Fastball. The tribunal determined fair market value of $20bn based
on the valuation submissions of both Flutter and FOX, where a full
range of valuation methodologies were applied, including discounted
cash flow.
FOX has a ten-year period from December 2020 within which to
exercise the Option, should it wish to do so, subject to an annual
compounding carrying value adjustment of 5%. Cash payment is
required at the time of exercise and the Option can only be
exercised in full. Exercise of the Option requires FOX to be
licensed and should FOX not exercise within this timeframe, the
Option shall lapse.
As of 4 November 2022 the Option price is $4.1bn made up of the
$3.7bn exercise price for 18.6% of FanDuel plus the 5% annual
carrying value adjustment.
2. Supplemental Items
After the commencement of the arbitration process in April 2021,
FOX filed two supplementary items for consideration.
Firstly, FOX claimed that Flutter had failed to provide
commercially reasonable resources to the operation of FOX Bet. The
tribunal has denied FOX's claim in its entirety and has ruled in
favour of Flutter holding that commercially reasonable resources
have been provided to FOX Bet.
This means FOX continues to retain the right to acquire up to
50% of TSG US(1) , 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.
The remaining matter before the tribunal is whether and, if so,
under what conditions FOX is entitled to participate in an IPO of a
parent company of FanDuel , should one occur. Flutter has agreed
that it will not proceed with any potential IPO, if at all, 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.
Peter Jackson, Flutter Chief Executive, commented:
"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. FanDuel is
winning in the US market and the clear #1 operator, a position
driven by its exceptional market leading product and efficiency in
acquiring customers at scale. The team remain focused on
maintaining our leadership position and we look forward to updating
the market on our progress at our US capital markets day on 16(th)
November."
The person responsible for arranging release of this
Announcement on behalf of Flutter is Edward Traynor, Company
Secretary of Flutter.
(1) TSG US contains the operations of FOX Bet, Super6 and
PokerStars US.
Contacts:
Investor Relations:
Paul Tymms, Director of IR and FP&A + 44 75 5715 5768
Ciara O'Mullane, Investor Relations + 353 87 947 7862
Liam Kealy, Investor Relations + 353 87 665 2014
Press:
Kate Delahunty, Chief Communications
Officer + 44 78 1077 0165
Lindsay Dunford, Corporate Communications + 44 79 3197 2959
Rob Allen, Corporate Communications + 44 75 5444 1363
Billy Murphy, Drury Communications + 353 1 260 5000
James Murgatroyd, Finsbury + 44 20 7251 3801
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