Legal Sports Report has been aware of quite a bit of tire-kicking on FanDuel in recent months from various companies. But Axios put a name to one of those prospective buyers in a report on Thursday:
Multiple sources tell Axios that the fantasy sports site is likely to participate in a reverse merger with Platinum Eagle Acquisition Corp., a special purpose acquisition company formed earlier this year by veteran media executive Jeff Sagansky.
A reverse merger for FanDuel?
Platinum Eagle is listed on NASDAQ. The deal going through would thus make FanDuel a publicly traded firm.
A reverse merger like this would be done in order to take a company public without going through an initial public offering.
FanDuel’s other exit strategies would also likely land it as a part of a larger publicly traded company.
Last year, CEO Nigel Eccles left the post of the company he founded. He was replaced by the company’s former chief financial officer, Matt King, a move many believed was pointed toward a sale of the company.
A special acquisition company?
What’s a special purpose acquisition company? It’s basically a publicly traded company that raises money in order to buy other companies.
Platinum Eagle was just launched in January and has raised $300 million. Given those numbers and the timing, it’s possible all of the company’s capital could be deployed to purchase a majority of interest in FanDuel.
The full sale price of FanDuel would likely be lower than the $1 billion valuation the company once enjoyed.
FanDuel asked for its case over the legality of DFS in Illinois to be dismissed this week, a sign it could be trying to clear the decks for this acquisition.
A key year for DFS
That’s put the two companies back on separate paths. DraftKings has mentioned the possibility of an IPO, but it’s not clear that that’s a real possibility in the short term.
If FanDuel gets a sudden infusion of cash from Platinum Eagle, watch for it to attempt to wrest back control of the DFS market that it once dominated.