US Tech news source Recode has reported that FanDuel enterprise co-founder Nigel Eccles (former CEO) is preparing to take Paddy Power Betfair (PPB) to court, regarding its $465 million takeover of FanDuel completed in July 2018.
Eccles representatives have filed a Scottish court order against PPB, representing four of FanDuel’s enterprise co-founders; Nigel Eccles, wife Lesley Eccles (former CMO), Tom Griffiths (former CPO) and Rob Jones (corporate advisor).
As reported, the founding team seeks approximately $120 million in compensation for the sale of FanDuel to PPB.
The plaintiffs claim that the transaction had been purposely undervalued, by not taking into account changes to US market conditions following the repeal of federal PASPA laws, which would liberalise the US sports betting market, increasing FanDuel’s enterprise valuation.
At the time of PPB’s transaction, the founding team had departed the company to pursue new ventures. However, the founders maintained a substantial ‘non-preferred’ share arrangement, attached to FanDuel’s future outcome.
“The decision of the board (whose interests are aligned with preference shareholders), not to seek and act upon a new market valuation in the face of a material event, which is likely to have significantly increased the market valuation of FanDuel, is a breach of its fiduciary duties,” the petition reads.
Reacting to a new US landscape, last May PPB governance moved to acquire FanDuel’s enterprise outright for $465 million.
Significantly expanding its US footprint, PPB governance would create a new US-specific subsidiary, merging FanDuel DFS properties with Betfair’s existing US wagering division.
The transaction’s make-up would mean those holders’ of ‘non-preferred shares’ would not be rewarded for the sale of FanDuel, as certain venture investors would receive preferential pay-outs.
In the Scottish court filing, Eccles representatives demand that FanDuel’s enterprise valuation be recalculated.