Flutter Entertainment shares fell on Wednesday after a placing and as it emerged that Fox Corp is in a legal dispute with the company related to its option to buy an 18.6% stake in US sports betting group FanDuel.
CNBC reported on Tuesday that Flutter – the majority owner of FanDuel – wants to buy the stake at an $11.2bn valuation, which is the value that was set when it bought a 37.2% stake from Fastball in December.
However, Flutter was understood to have argued that Fox must pay “fair market value” to exercise the option in July. That price could be determined by a FanDuel initial public offering, which Flutter is considering.
A Fox spokesperson confirmed to CNBC that it had filed the suit last week to New York’s Judicial Arbitration and Mediation Services (JAMS).
“Fox Corporation has filed suit against Flutter to enforce its rights to acquire an 18.6% ownership interest in FanDuel Group – an American sports betting brand – for the same price that Flutter paid for that interest in December 2020,” the spokesperson said.
Flutter said on Wednesday that under the terms of its agreement with Fox, an arbitration mechanism was put in place at the time of The Stars Group merger announcement “to be conducted in the event of a disagreement between the two parties relating to the option”.
“That now being the case, such a process has been initiated by Fox.”
Flutter said Fox’s position that it has a right to acquire the interest in FanDuel based on an $11.2bn valuation is “incorrect”.
“It would represent a windfall to Fox compared to the fair market valuation as of July 2021, to which the parties had previously agreed. Flutter will not allow Fox’s filing, which is without merit, to distract from its business and will vigorously defend its position in the arbitration.”
Traders also said the stock was under pressure after around 2.3m shares in the company were placed at £153 each. The placing was linked to Fastball, with Goldman Sachs acting as bookrunner.
At 0835 BST, the shares were down 2.2% at 15,405p.
