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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.
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.
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.
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.