FanDuel founders renew $120m compensation claim against Flutter Entertainment

Nigel and Lesley Eccles, the enterprise founders of US fantasy sports operator FanDuel are reported to be renewing their legal challenge against Flutter Entertainment Plc (formerly Paddy Power Betfair), in relation to the FTSE firm’s $465 million takeover of FanDuel completed in July of last year.

The husband and wife team are joined by FanDuel co-founders’ Tom Griffiths (former CPO) and Rob Jones (corporate advisor), seeking $120 million in compensation from the takeover which they believe had ‘purposely undervalued FanDuel’.

FanDuel founders had previously filed an Edinburgh court challenge against deal incumbents, stating that FanDuel’s price had been ‘purposely undervalued’ as the transaction took place against the backdrop of changing US sports betting landscape, following the repeal of PASPA federal laws, which should have significantly increased the value of the DFS operator.

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.

Moving to significantly advance its US-position, PPB governance sanctioned a $465 million of acquisition of FanDuel, an asset that it would merge with its Betfair-TVG US racing division forming the FTSE firm’s US market-specific venture.

Executing its takeover of FanDuel, PPB’s transaction would not reward ordinary shareholders, as the FanDuel enterprise had raised $420 million to date in venture financing undertaken through seven funding rounds.

Furthermore, Flutter maintains that the takeover had been approved by FanDuel majority investors Shamrock Capital Advisers and Kohlberg Kravis Roberts (KKR), which respectively led $70m and $275m funding rounds in FanDuel in 2014 and 2015.

Matt King current CEO of FanDuel confirmed that the company governance was aware of an imminent lawsuit by Eccles & Co, but detailed that stakeholders believed that FanDuel founders would be unsuccessful in any legal challenge.

“While it is possible the case reaches a merits determination, the group does not consider it probable and therefore no accrual has been recorded as of the balance sheet date.” King states on FanDuel’s corporate accounts.

Check Also

SBTech continues tier-1 form winning Svenska Spel sportsbook tender

SBTech secures a further tier-1 betting systems partnership this summer, becoming the lead multi-channel sportsbook …

Juroszek family backs ‘proven player’ Better Collective

Mateusz Juroszek the Chief Executive & President of Polish market leading bookmaker STS has purchased …

GambleAware rolls out education scheme with Parent Zone

GambleAware has continued to grow its industry partnerships after agreeing to work alongside digital family …