Hailing as one of the top-tier America-based mass media firms, Fox Corporation has filed a lawsuit concerning the value of its 18.6% stake in FanDuel, the renowned sports betting cluster owned by Britain’s Flutter Entertainment. The case filed by Fox is directed to secure its option to buy the prescribed stake into FanDuel at a price paid by the team in December rather than the fair market price as advocated by Flutter. The dispute dates back to 2019, when the Flutter Group took over the Stars Group as part of a deal.
According to the report, Fox had a business pact with the Stars Group and so decided to acquire the stake in FanDuel at 18.5% interest. Fox is willing to get the stake at an investment of $11.2 billion, as was decided in December 2019 when Flutter acquired the 37.2% stake in FanDuel from Fastball to rule the sportsbook with a 95% majority share finally. However, Flutter is adamant that Fox should pay the market price to execute its option in July.
Fox has claimed that the fair market clause was not mentioned by Flutter at the signing of the contract. The firm claimed that the market price clause would nullify the option, specifically if the IPO is organized before July 2021, as then the FMV shall be the open market price of the entity. The Fox Group has a 10-year option to purchase half of The Stars Group Incorporated’s American assets, including PokerStars and Fox Bet sports betting hub. The firm has been urging Flutter to merge these clusters with FanDuel instead of more equity in a new listed entity.
The fair market price shall be ascertained by a FanDuel IPO as proposed by the Flutter team, or else it will be decided by the banking institutions. The value determined by the banks is likely to be higher than its competitor firms like DraftKings, which enjoys a $25 Billion market capitalization. The case has been filed to Judicial Arbitration and Mediation Services, New York.
The lawsuit can be seen as a major event in the sports betting industry that is likely to expand as 19 states are willing to give the nod to mobile legalization. The data released revealed that in 2020 the U.S sports betting industry fetched $30 Billion in cumulative gaming revenue.
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Source: Fox Corporation Drags Flutter Entertainment to Court