UK and Ireland sports betting operator Paddy Power Betfair has announced the signing of an agreement to combine its US business with US daily fantasy sports operator FanDuel.
Under the agreement, Paddy Power Betfair will contribute its existing US assets along with a cash contribution of $158m. The company has confirmed that this cash contribution will be used to pay down existing FanDuel debts, which amounted to $76m at 31 March 2018 and fund working capital of the combined business.
Upon completion of the transaction, Paddy Power Betfair will own 61% of the combined business, with existing FanDuel investors owning 39%.
All current FanDuel investors will continue their investment in the combined business with a further proviso to take the Paddy Power Betfair’s ownership of the business to 80% after three years and 100% after five years.
Additionally, as part of the deal Paddy Power Betfair will have operational control of the business, which will become a fully consolidated subsidiary following completion. Paddy Power Betfair also has the right to appoint the CEO and a majority of the Board of Directors of the acquired business.
FanDuel has over 40% market share of the US daily fantasy sports market, with 7 million registered customers across 40 states. In 2017, it had revenue of $124m and 1.3 million active customers.
Speaking about the acquisition, Peter Jackson, CEO of Paddy Power Betfair, commented: "We are excited to add FanDuel to the Group's portfolio of leading sports brands. This combination creates the industry's largest online business in the US, with a large sports-focused customer base and an extensive nationwide footprint.
“The Group has leading sports betting operating capabilities globally and strong operations on the ground in the US. Together with our substantial financial firepower, we believe we are now well placed to target the prospective US sports betting opportunity."
The move comes less than a week after the US Supreme Court voted to endorse the state of New Jersey’s right to offer sports betting within its borders, a move which opens the door for sports betting legalisation across the US.
Matt King, CEO of FanDuel, added: “We are excited to bring these two great businesses together. The combination of brands and team, along with a shared culture and vision for the future, creates the leading gaming destination for US sports fans.”
The transaction is subject to customary regulatory and anti-trust reviews under US law, but is expected to complete in Q3 2018.