Fox Reportedly Aims for FanDuel Stake at $2.2bn Below Value

Several years ago, in 2020, the leading gaming and entertainment company, Flutter Entertainment, purchased The Stars Group. This created a connection between the former and Fox Corporation, one of the world’s leading and most valued mass media companies in America.

Through this legal connection, Fox secured an option to purchase a stake in FanDuel, Flutter’s leading brand and one of the two most popular betting operators across the United States. Earlier this week, Fox’s CEO, Lachlan Murdoch, reportedly hinted at the possibility of the company securing a stake in FanDuel below the open market value.

FanDuel Is Valued at $35bn, Goldman Sachs Data Suggests
On Tuesday, he spoke during the Goldman Sachs Communacopia and Technology Conference. Citing Goldman Sachs analyst data, Murdoch said that FanDuel is valued at $35 billion, as announced by Sportico.

Considering that Fox has the ability to acquire an 18.6% ownership stake in FanDuel, such a transaction would be valued at roughly $6.5 billion, based on the betting analyst’s estimated value. However, in a financial update released last month, Fox said that estimates that approximately $4.3 billion would be needed to acquire the 18.6% stake in FanDuel.

As described in Fox’s report: “In addition FOX Sports holds a 10-year call option expiring in December 2030 to acquire an 18.6% equity interest in Flutter’s majority-owned subsidiary, FanDuel Group, the exercise of which is subject to certain conditions and applicable gambling regulatory approvals. As of June 30, 2024, the option exercise price is approximately $4.3 billion.”

Fox Can Benefit from a Range of Opportunities by Acquiring a Stake in FanDuel
During the recent conference, Murdoch reportedly said that the $4.3 billion price tag for the stake is one option Fox may consider. A comparison shows that if completed, such a transaction would be some $2.2 billion below the market value of FanDuel.

At the recent conference, Murdoch explained: “We’re not going to leave $2 billion on the table.” He pointed to the strategic benefits Fox may reap by growing its share in FanDuel, including new opportunities to further engage with its viewers.

The media company’s 10-year option to acquire an 18.6% stake in FanDuel means such a deal can be completed until December 2030. However, the recent call signals that Fox may consider completing the acquisition earlier than the deadline. As noted by the media company, acquiring the stake is subject to the relevant regulatory approvals and conditions.

Recently, FanDuel uncovered a new responsible gambling program starring Randy Livingston. The initiative was announced ahead of September, which is recognized as Responsible Gaming Education Month.