Fox Corporation Getting Closer to Acquiring 18.6% FanDuel Stake

Fox CEO says he won’t leave “$2 billion on the table,” suggesting a FanDuel purchase is imminent. 

Amy Calistri - News Editor at Covers.com
Amy Calistri • News Editor
Sep 13, 2024 • 09:34 ET • 4 min read
Photo By - USA TODAY Sports

Fox CEO Lachlan Murdoch fueled speculation that the global media giant might soon exercise its option to buy an 18.6% stake in FanDuel.

Murdoch cited Goldman Sachs’ $35 billion valuation of the sports betting and gaming firm. That would give Fox's potential stake in FanDuel a market value of roughly $6.5 billion. Meanwhile, Fox would only have to pay an estimated $4.3 billion to exercise its option.

"We're not going to leave $2 billion on the table," Murdoch quipped Tuesday at the Goldman Sachs Communacopia and Technology Conference.

The Fox Corporation currently owns a 2.5% stake in Flutter Entertainment, FanDuel’s parent company. Fox also has an option – but not an obligation -- to acquire an 18.6% stake in FanDuel, which expires in December 2030.  A few years ago, Fox tried to exercise that option, but Flutter and Fox couldn’t agree on the legally applicable price. As a result, the dispute went into arbitration. 

In November 2023, the Judicial Arbitration and Mediation Services tribunal ruled that the fair price for the 18.6% stake in 2020 was $3.7 billion. It also determined that the fair price for the stake should increase 5% annually until the exercise date or expiration date of the option. In 2024, that would make the fair price of the stake roughly $4.3 billion. 

At this point, the option has not been exercised. Nothing has been filed with the Securities and Exchange Commission. And although Fox is working toward gaining the required gaming regulatory approvals, that activity is still ongoing.

Flutter might not be thrilled with the prospect of selling the 18.6% FanDuel stake for $2 billion less than Goldman Sachs’ current valuation. But it might not be that disappointed. Flutter has wanted to split off FanDuel as a separate company. Per the terms of the arbitration, however, Flutter can’t pursue an initial public offering for FanDuel unless either Fox or the arbitrator agree. Selling a stake to Fox, giving them skin in the game, may be one way to finally secure FanDuel’s IPO.  

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Amy Calistri - Covers.com
News Editor

Amy Calistri got her high school letter in golf and hasn't golfed since. She has a collegiate letter in wrestling, but never wrestled. She was arguably the worst catcher in IBM's coed softball league. But she is a hardcore sports fan, having spent her formative years yelling from Boston Garden's second balcony and Fenway's cheap seats. Amy loves when she can combine her love of sports with her business acumen. She has covered the sports and gambling industries for more than 20 years, writing for outlets including Bluff Magazine, PokerNews, and OnlineGambling.com. Amy co-hosted the popular radio show Keep Flopping Aces and co-wrote Mike “The Mouth” Matusow’s memoir, Check-Raising the Devil. Amy is also published in the areas of economics, investing, and statistics.

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