Flutter: Arbitrator Rules In Favor In FanDuel -FOX Deal; Stock Up

(RTTNews) - Sports betting company Flutter Entertainment PLC (FLTR.L) Monday issued an update regarding FanDuel group- FOX Corp. arbitration, noting that the arbitrator has ruled in favour of the company. Flutter shares were gaining around 4 percent in the early morning trading in London.

The company said the outcome of the arbitration confirms that the exercise price of FOX's option to acquire 18.6 percent of FanDuel is based on a FanDuel valuation of $20 billion.

The value is based on fair market value as of December 2020, the date on which Flutter announced the acquisition of Fastball Holdings LLC's 37.2 percent stake in FanDuel for an implied FanDuel valuation of $11.2 billion.

FOX has a ten-year period from December 2020 within which to exercise the Option.

The exercise price is subject to a 5 percent 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 $22 billion and a cost of $4.1 billion for FOX to acquire an 18.6 percent stake in FanDuel. This includes the $3.7 billion exercise price for 18.6 percent of FanDuel plus the 5 percent annual carrying value adjustment.

Flutter noted that its relationship with FOX is subject to a binding arbitration mechanism where the parties may resolve any disagreements.

It was on April 7, 2021 that FOX initiated an arbitration process with respect to a legal dispute over the terms of FOX's option to acquire an 18.6 percent stake in FanDuel and related issues. After the commencement of the arbitration process, FOX filed two supplementary items for consideration.

The tribunal determined fair market value of $20 billion based on the valuation submissions of both Flutter and FOX, where a full range of valuation methodologies were applied, including discounted cash flow.

The company said, "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."

In London, Flutter shares were trading at 11,940 pence, up 3.74 percent.