FanDuel Execs Hit Paydirt — Founders, Shareholders Left Out in the Cold — in Paddy Power Betfair Merger
Posted on: July 6, 2018, 05:00h.
Last updated on: July 6, 2018, 05:15h.
Daily fantasty sports betting player FanDuel is putting its money where its suits are: that’s the reality unfolding in front of the DFS giant’s founding members and common shareholders, as the company’s sale to Irish bookmaker Paddy Power Betfair unfolds.
Along for the Ride
FanDuel’s majority shareholders — KKR and Shamrock Capital — exercised their “drag along right” in the sale, which forces minority shareholders to accept the sale. The company appeared to acknowledge the slight that shareholders might feel, saying the PPB offer was the best one on the table.
“It is important to note that no other offer available to FanDuel as a result [of exploring a sale] was of a sufficient value, if distributed pursuant to the terms of the Articles with respect to a change of control transaction, to entitle any holders of ordinary shares to participate with respect to such shares,” a document regarding the sale and obtained by Legal Sports Report reads.
“In addition, the allocation of the proceeds of [the sale] to FanDuel’s Shareholders is consistent with the terms of FanDuel’s pre-existing organizational documents that have been in effect for an extended period of time.”
Legal Sports Report noted that FanDuel executives will profit handsomely from the merger, and could receive the following projected payouts:
- CEO Matt King: $11,342,688
- Chief Technical Officer Robin Spira: $3,517,833
- Chief Legal Officer Christian Genetski: $6,186,814
- Chief Financial Officer Andy Giancamilli: $4,957,685
- Executive Vice President of Corporate Strategy David VanEgmond: $2,601,338
- Chief Marketing Officer Mike Raffensperger: $1,693,375
The $465 million offer was “larger than any other offer made” while the company explored a sale, but still is not enough to fulfill a $558 million commitment to the company’s “A Preference Shares,” the report continued.
FanDuel’s current capitalization, including this aggregate preference amount, is the result of a restructuring which occurred in 2017 following the unsuccessful attempt to merge FanDuel with Draft Kings,” the document reads.
“That 2017 restructuring reduced the total amount of preferences that would need to be paid off in a change of control transaction prior to any consideration going to the holders of ordinary shares from the previous amount that had been in place since FanDuel’s 2015 Series E Financing.”
The sale of FanDuel to Paddy Power Betfair represents a shift in the company’s vision, as it prepares to become a major player in online sports gambling, following the Supreme Court’s decision in May to strike down a federal ban on sports betting.
Documents related to the sale acknowledge that some investors — such as the NBA — have agreed to sell all of their stock in the company because they are “unwilling to directly or indirectly own equity securities in the Company for regulatory and other reasons related to the Company’s present and future participation in the sports betting business.”
FanDuel was prepared for the Supreme Court decision and has worked with regulators in states across the United States. Partnering with PPB combines FanDuel’s customer base with the Irish bookmaker’s experience in sports betting.
DraftKings, the other leading DFS provider, has also begun to position itself for sports betting. In June, DraftKings entered into a deal with Kambi Group, which will provide the company with the interface and technology to support sports betting.
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