Paddy Power Betfair parent Flutter has extended its partnership with Boyd Gaming out to 2038 and bought out the group’s 5 per cent stake in gambling company FanDuel for $1.75 billion (€1.5 billion).
The sports betting and iGaming giant, which is listed in New York, now fully owns FanDuel, which is valued at about $31 billion. That valuation is well below the $40 billion analysts at Davy had on the business.
Flutter will also make a payment of $205 million for the renegotiation of its market access at more attractive terms.
Davy analyst Paul Ruddy described the deal as “undoubtedly a good use of capital as it provides additional certainty around market access and increased ownership of this key strategic asset”.
READ MORE
The company said the deal also provides for the extension of the strategic partnership between FanDuel and Boyd at “significantly reduced” market access costs in the states where FanDuel’s market access is provided by Boyd.
This is expected to contribute to annual savings for Flutter of approximately $65 million beginning July 1st.
FanDuel is the market leader in the United States with a 43 per cent market share in sports betting and 27 per cent in iGaming.
Flutter said the deal underpinned its confidence in the long-term profitability profile of its US business, demonstrating the ability to help mitigate both recent and future tax increases.
The transaction is expected to complete in the third quarter of this year, and will be funded by additional debt financing.
Flutter chief executive Peter Jackson described the company’s acquisition of FanDuel in 2018 as “one of the most transformational events in our group’s history”.
“I am really pleased to drive future value for our shareholders by increasing our ownership of FanDuel to 100 per cent,” he said. “Boyd have been fantastic partners for FanDuel, and we are delighted to be extending our important strategic partnership through to 2038.”
Separately, Flutter and some of its subsidiaries have entered into a definitive bridge credit agreement with certain banks to obtain binding commitments in respect of a senior secured first lien term loan of $1.75 billion.
Flutter plans to use the facility to finance or refinance amounts payable in connection with the FanDuel deal. The facility will mature 12 months after it is first utilised, with two additional six-month extension options. It will bear an interest rate of 1.25 per cent.