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By Scott Kanowsky
Investing.com — London-listed shares in Flutter Entertainment PLC (LON: ) rallied in morning trading on Monday after a New York arbitrator ruled on the legal dispute. between the sports betting group and Rupert Murdoch’s Fox Corp Class B ( NASDAQ: ).
A New York Judicial Arbitration and Mediation Services ruling found Fox must pay at least $3.7B if it decides to exercise an option to seize a minority stake in FanDuel, a gaming platform owned by Flutter.
The reason is the value of FanDuel. Fox filed a 2021 claim against Flutter last year, saying the stake payment should be tied to FanDuel’s $11.2B valuation when Flutter increased its holdings. year 2020.
Fox is less expensive to buy.
However, the arbitral tribunal found that the option should be based on FanDuel’s valuation of $20B and an annual compound value adjustment of 5%. When this figure is included, it means that Fox has to pay about $4B for the stake in FanDuel.
If the decision had been overturned, Flutter would have been forced to buy a bank at a premium rate. Fox now has 2030 to buy.
“Today’s decision confirms our confidence in our position on this issue and the certainty that it will be worth it for FOX to buy into this business, should they wish to do so,” said said Flutter CEO Peter Jackson in a statement.
Analysts at Morgan Stanley called the arbitration benefit a “net gain” for Flutter, adding that it further explains FanDuel’s status and dominance. Analysts also raised the price target for Flutter to 16.000p from 15.800p.
Fox announced its victory after the decision, pointing out that the 10-year option it will sell shares in a “market-leading” deal. The advertising group said that this acquisition will allow it to take advantage of the increase in the value of the gaming industry.
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