(Alliance News) - Flutter Entertainment PLC on Thursday said it has struck a USD4.18 billion deal to own nearly all of the FanDuel business, boosting the Paddy Power owner's US exposure.
Flutter also outlined plans for an equity raise, with Fox Corp investing further in the bookmaker, to help fund the deal.
Flutter shares jumped 12% to 15,000.00 pence each in London on Thursday afternoon.
The deal - which will see the FTSE 100 company top up its stake in FanDuel by just over of 37% - needs the support of Flutter's shareholders at an extraordinary meeting planned before the end of the year.
Should the deal with sellers Fastball Holdings LLC go ahead, Flutter will have a 95% stake in the fantasy sports, casino and horse racing business, up from just under 59% now.
The USD4.18 billion deal will be part funded by USD2.09 billion in cash and the issue of 11.7 million Flutter shares to Fastball.
The buy "materially increases exposure to US market", Flutter said, "the most attractive sector opportunity today".
The deal gives FanDuel an enterprise value of USD11.2 billion, more than a 40% discount to peer DraftKings Inc, Flutter added.
"Flutter's initial acquisition of a controlling stake in FanDuel in 2018 has been transformational for the shape of the group. Our number one position in the crucial US market is built on many of the assets we acquired through that transaction, supported by the broader group's capabilities. Our intention has always been to increase our stake in the business and I'm delighted to be able to do so earlier than originally planned and at a discount to its closest peer," Flutter Chief Executive Peter Jackson said.
To help fund the deal, Flutter said it plans to raise GBP1.1 billion through an equity raise. As part of the placing, Fox Corp has "committed to invest further in Flutter".
"We are delighted to participate in this capital raising. Maintaining our ownership stake in Flutter signifies our long-term commitment to Flutter, and ongoing confidence in management's ability to execute against the fast growing US opportunity. FOX's audiences have proven to be highly engaged with free to play and wagering content, and we are excited to offer them access to products from Flutter's market leading stable of US brands," Fox Executive Chair and CEO Lachlan Murdoch said.
The move to boost its FanDuel stake comes as London-listed peers have received interest from the US or have moved to boost their exposure in the lucrative gambling market there. On Wednesday, 888 Holdings Ltd said it has penned "multi-year market access agreements" which will double the number of US states in which it operates.
And back in September, William Hill PLC agreed to a GBP2.9 billion buyout from US firm Caesars Entertainment Inc.
By Eric Cunha; ericcunha@alliancenews.com
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