PPB hit with lawsuit for purposely undervaluing FanDuel assets

PPB hit with lawsuit for purposely undervaluing FanDuel assets

Thursday, August 16, 2018 Posted by Luke Massey
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PPB’s acquisition of FanDuel was completed in July of this year

Nigel Eccles, one of the co-founders of US daily fantasy sports operator FanDuel, has filed a Scottish lawsuit against Paddy Power Betfair (PPB), claiming that the FTSE betting group ‘purposely undervalued’ FanDuel’s enterprise value during its $465 million takeover transaction.

A legal petition against PPB has been filed representing the interests of FanDuel’s enterprise founding team: Nigel Eccles (former CEO), wife Lesley Eccles (former CMO), Tom Griffiths (former CPO) and Rob Jones (corporate advisor).

FanDuel founders seek approximately $120 million in compensation from PPB, who are charged with purposely undervaluing the DFS operator’s value following significant changes to US sports betting landscape post PASPA.

Though the plaintiffs had departed the company during the negotiation of PPB’s $465 million takeover of the DFS operator, the enterprise founders held a substantial ‘non-preferred’ share arrangement attached to FanDuel’s future outcome.

Eccles’ representatives demand that PPB revalue/recalculate the enterprise value of FanDuel, taking into account the repeal of PASPA’s federal mandate which has secured PPB a significant footprint within the liberalised US betting market.

“The decision of the board (whose interests are aligned with preference shareholders), not to seek and act upon a new market valuation in the face of a material event, which is likely to have significantly increased the market valuation of FanDuel, is a breach of its fiduciary duties,” reads Eccles petition.

PPB completed its $465 million acquisition of FanDuel in July 2018. Reacting to radical regulatory changes, PPB governance would merge its existing Betfair US wagering services with FanDuel DFS properties, creating a US-centric business entity.

Executing the transaction, PPB chose not to reward ‘non-preferred’ shareholders as FanDuel’s significant venture investors would receive preferential payouts and equity in the new US business (PPB 61% majority shareholder).

Totally Gaming says: Nigel Eccles has filed a lawsuit which has caught the attention of wider Tech and business media. In its interim update, PPB has stated that it will prioritise accelerating FanDuel’s US proposition seeking rapid US expansion against mounting competition. A legal challenge on FanDuel’s value may well hinder PPB proceedings…Watch this space!

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