Fox CEO Lachlan Murdoch fueled speculation that the global media giant might soon exercise its option to buy an 18.6% stake in FanDuel.
Murdoch cited Goldman Sachs’ $35 billion valuation of the sports betting and gaming firm. That would give Fox's potential stake in FanDuel a market value of roughly $6.5 billion. Meanwhile, Fox would only have to pay an estimated $4.3 billion to exercise its option.
"We're not going to leave $2 billion on the table," Murdoch quipped Tuesday at the Goldman Sachs Communacopia and Technology Conference.
The Fox Corporation currently owns a 2.5% stake in Flutter Entertainment, FanDuel’s parent company. Fox also has an option – but not an obligation -- to acquire an 18.6% stake in FanDuel, which expires in December 2030. A few years ago, Fox tried to exercise that option, but Flutter and Fox couldn’t agree on the legally applicable price. As a result, the dispute went into arbitration.
In November 2023, the Judicial Arbitration and Mediation Services tribunal ruled that the fair price for the 18.6% stake in 2020 was $3.7 billion. It also determined that the fair price for the stake should increase 5% annually until the exercise date or expiration date of the option. In 2024, that would make the fair price of the stake roughly $4.3 billion.
At this point, the option has not been exercised. Nothing has been filed with the Securities and Exchange Commission. And although Fox is working toward gaining the required gaming regulatory approvals, that activity is still ongoing.
Flutter might not be thrilled with the prospect of selling the 18.6% FanDuel stake for $2 billion less than Goldman Sachs’ current valuation. But it might not be that disappointed. Flutter has wanted to split off FanDuel as a separate company. Per the terms of the arbitration, however, Flutter can’t pursue an initial public offering for FanDuel unless either Fox or the arbitrator agree. Selling a stake to Fox, giving them skin in the game, may be one way to finally secure FanDuel’s IPO.
