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By Tuesday, PPB had confirmed the talks in a statement:
Paddy Power Betfair plc (“the Group”) notes the media speculation, and confirms it is in discussions regarding a potential combination of the Group’s US business and FanDuel to create a combined business to target the prospective US sports betting market.
Discussions are ongoing and there is no certainty as to whether agreement will be reached, or as to the terms or timing of any transaction.
>A further announcement will be made as appropriate.
The news comes as the US Supreme Court struck down the federal ban on single-game wagering on Monday in the New Jersey sports betting case. It’s possible that decision triggered an escalation in talks that were already underway.
FanDuel CEO Matt King recently indicated that his company would be interested in getting into the sports betting space.
LSR has not determined if the deal has been consummated yet, or when it might be. Such clarification is not likely until a deal is actually announced by the two companies.
Details of the acquisition and the price PPB is offering are also unknown, but it appears likely to be below the $1 billion valuation that FanDuel once enjoyed. Competitor DraftKings will obviously be very interested in what the price will be. It would seem that the possibility of a reverse merger with a special purpose acquisition company reported earlier this year is now on the back burner.
Almost exactly a year ago, PPB acquired daily fantasy sports platform Draft for a deal that could be worth nearly $50 million.
Since then, it has dedicated tens of millions in marketing costs, assumed to be in part setting up PPB for entry into a potential regulated sports betting market in the US.
Some possible reasons for the acquisition: