FanDuel’s founders and more than 100 former employees said that the company’s BOD and private-equity investors “intentionally undervalued the sports-betting operator to shut them out of an acquisition deal,” according to Katherine Sayre of the WALL STREET JOURNAL. FanDuel merged with the U.S. operations of Dublin-based gambling operator Paddy Power Betfair in ‘18 to create FanDuel Group. In a lawsuit filed in New York Supreme Court, FanDuel founders and former employees who were shareholders said that they “received nothing in the all-stock deal,” after the BOD, including current CEO Matt King, and private-equity investors Shamrock Capital Advisors and KKR & Co., “reduced what the new company was worth.” In response, a FanDuel spokesperson said the sale to Paddy Power “followed a thorough process in accordance with the company’s governance rules and represented fair-market value.” The lawsuit argues that in the ‘18 deal with Paddy Power, FanDuel’s BOD “chose not to obtain an independent valuation, ignored the potential implications of legalized sports betting after the Supreme Court’s decision and didn’t hold a shareholders’ vote on the deal.” Paddy Power agreed to pay $158M in cash and “contribute its existing U.S. assets for a stake of about 60% in the new company, and FanDuel took about a 40% stake” (WALL STREET JOURNAL, 2/26).
