Former FanDuel CEO sues investors over alleged merger undervaluation

[The Buzz]

Excellent article by CasinoReports.com regarding the lawsuit by former FanDuel CEO Nigel Eccles and others against investors highlights alleged financial manipulations during FanDuel's merger with Paddy Power Betfair. The context of this lawsuit is crucial: it occurred as the U.S. was on the brink of legalizing sports betting nationwide.

The lawsuit essentially argues that the defendants prioritized their own financial interests over those of the common shareholders, taking advantage of the timing and the potential windfall from the legalization of sports betting to secure a better deal for themselves.

From the article:

Eccles was dismissed by the board in November 2017, a move that Eccles says “shocked” him. He was replaced by Matt King, the former FanDuel chief financial officer and previously an executive with defendant KKR.

Behind the scenes, wheels were now in motion regarding a possible merger of FanDuel with Irish gaming industry giant Paddy Power Betfair (PPB), now known as Flutter Entertainment plc (Flutter), a bookmaking business created in 2015 with the combination of Paddy Power and Betfair. The bookmaker would possess the experience to fully maximize the opportunity that was expected to come.

In April 2018, FanDuel executives estimated that “The sports gambling opportunity was 10-15 times larger than FanDuel’s existing daily fantasy sports business.” That same month, FanDuel and Paddy Power Betfair executives held a pair of meetings in New York City to discuss the possible merger.

A term sheet was then settled on April 28, 2018 — and that is when Eccles and his fellow plaintiffs say the financial shenanigans by the defendants further began to take shape. No valuation, they allege, was placed on the likelihood of country-wide sports betting expansion that was the basis for the merger.

This all took place with all involved knowing that a ruling from the highest Court would come no later than the end of June of that year, and that defendant New Jersey was now a prohibitive favorite to prevail over the NFL and four other major sports organizations.

The underlying, core allegation is that the self-interested board members steered a depressed price for FanDuel of $559.4 million in the merger with PPB, such that defendants KKR, Shamrock, King, and others, would have a greater share in the combined company known as PandaCo, and sharper financial upside in general. A series of alleged side deals and bribes helped align all of the defendants’ interests to effectuate the vote and a hasty closing of the deal in a way that froze out the entire class of common shareholders

Read the article here: https://www.casinoreports.com/timing...ded-complaint/

A link to the entire complaint: https://iapps.courts.state.ny.us/nys...w1vfKgylIjtQ==

[Pokerface]

Very interesting read and events, thanks for sharing.

[oddsballs]

He was not part of the negotiations - so whether he is right or wrong - how would he be sucessfull in suing them - it not like he was part of the company at the time.

[universal4]

He could possibly still have a case depending on how much stock he owned at the time of the sale.

Also interesting was the bit about the board members who helped steer the deal, were thy also heavily invested in Paddy?

Was the entire bit about getting him removed a complete setup by the board?

Rick
Universal4