Irish sports betting and gaming company Paddy Power Betfair PLC and New-York-based online fantasy sports firm FanDuel Inc. entered into a definitive agreement May 23 to merge their businesses in the U.S.
Paddy Power will own 61% of the combined business, which will be its fully consolidated subsidiary. FanDuel's existing investors will have 39% ownership. Also, there is an option under the agreement to increase Paddy Power's ownership in the merged entity to 80% after three years and 100% after five years.
The Dublin-based company said it will contribute its existing assets in the U.S. along with $158 million in cash, which will be used to repay FanDuel's debt and fund working capital of the merged entity. As of March 31, FanDuel's net debt stood at $76 million.
With the merger, Paddy Power plans to target the prospective U.S. sports betting market by combining its international betting and gaming business including its TVG horseracing betting network, media business and its online casino business in New Jersey with FanDuel's fantasy sports.
The merged company will invest in developing new products for consumers, with an expanded workforce and other growth opportunities.
Paddy Power on May 16 confirmed that it was in talks with FanDuel on a potential deal. The company now expects to close the deal by the third quarter 2018, subject to customary closing conditions and regulatory approvals.
