FanDuel investors are facing a lawsuit in New York regarding the value of the company ahead of a merger.
An investor in Flutter Entertainment, formerly Paddy Power Betfair, is being sued in New York by the founders of FanDuel and other former employees of the operator over the value of the company amid a 2018 merger. The suit has been given the green light to proceed after the New York Court of Appeals ruled on Thursday that a lawsuit filed in Scotland by the founders of FanDuel and over 100 people should not have been dismissed by a lower court. Shamrock Capital Advisors, which held a more than 14% stake in FanDuel, was initially sued in 2018.
“Once a court determines that another jurisdiction’s law governs, it has significant flexibility and discretion in deciding whether to take notice of that foreign law and apply it to the case at hand,” said Associate New York Court of Appeals Judge Madeline Singas in an opinion. “In the present case, the Appellate Division correctly concluded that Scots law applies to plaintiffs’ claims and appropriately took judicial notice of its content in resolving defendants’ motion to dismiss.”
The founders of FanDuel, Nigel and Lesley Eccles, have been given the right to continue their lawsuit against Shamrock Capital Advisors after filing an initial $120 million suit in 2018. The Eccles family, along with several others, founded FanDuel in Scotland in 2007 before bringing the brand to America in 2009 where it transformed into a DFS giant.
Failed attempt for FanDuel
FanDuel continued to grow with its top competitor, DraftKings, taking notice. The notice led to DraftKings and FanDuel agreeing to a “merger of equals,” which eventually dissolved.
The merger would have valued the combined company at roughly $1.2 billion.
Despite the failed merger due to antitrust concerns, FanDuel continued to showcase its viability as a DFS operator, which eventually led to preferred shares for leadership in the company being valued at $559 million with a merger with Paddy Power Betfair.
The two companies would eventually agree to a merger.
The merger between FanDuel and Paddy Power Betfair saw proceeds close at $465.5 million, a significant drop from the original price of preferred shares.
The merger had a lowered valuation but also saw the Eccles family cut out of the deal as they received no compensation due to the couple having left FanDuel before the transaction.
FanDuel paid the value of preferred shares to their holders with no proceeds left for the Eccles family. As a result, the duo and others sued FanDuel in Scotland and will continue to seek relief in New York following the 7-0 decision in the Court of Appeals to proceed.
