In a move to expand its corporate footprint within the US market, FTSE100 betting firm Paddy Power Betfair (PPB) has confirmed that it has agreed to acquire US mobile-focused fantasy sports operator DRAFT for a deal valued at $48 million (£37 million).
Entering the US DFS market, PPB will initially pay $19 million for all DRAFT related assets and resources, the bookmaker has attached a further $29 million in performance related benchmarks to be earned within a four-year period of its acquisition.
Founded in 2010 by CO-CEO’s Jeremy Levine and Jordan Fliegal, New York-based DRAFT seeks to be the leading mobile play DFS operator. The company is reported to have raised circa $6 million in venture funding for its operations (Crunchbase).
Speaking to business news sources, PPB CEO Breon Corcoran stated that the firms acquired asset had been able to differentiate its product offering within the highly competitive US DFS market, making it an attractive proposition. With the support of PPB marketing and development capabilities, DRAFT could become a further rival to leading US fantasy sports operators FanDuel and DraftKings
It has been reported that PPB governance are prepared to invest heavily in DRAFT, with the company forecasting an earnings loss of approximately $20 million before interest, taxes, depreciation and amortisation.
Issuing a market note on PPB’s acquisition Jonathan Buxton, partner and head of consumer and retail at Cavendish Corporate Finance, said:
“This deal is Paddy Power’s first venture into the US daily fantasy sports market. The firm is going ahead with the acquisition, despite the fact that it may lead to a 3% drop in earnings in the immediate future, this reflects the group’s confidence in the potential of this market. The transaction is demonstrative of the increasing search for mobile-led, digital companies that are able to cater to the changing habits and needs of customers and could be the first step in the diversification of the group’s offerings.”