Fox Corp. has filed a suit against Flutter Entertainment in relation to acquiring an 18.6% stake in FanDuel Group, an online betting sportsbook in the US. Fox wants to pay the same price as Flutter paid for that same stake in December last year.
Last month, CNBC reported that Fox Sports, a unit of Fox Corp (FOXA), currently owns 2.5% of Flutter but has an option to buy an additional 18.5% stake in FanDuel in July this year. Flutter Entertainment currently owns 95% of FanDuel but plans to spin-out FanDuel as a separately traded company, the report said.
Flutter Entertainment is a UK based gaming company and in December last year, bought out Fastball’s 37.2% stake in FanDuel for £3.3 billion.
According to CNBC, Fox can also exercise a 10-year option to buy 50% of Stars Group’s business in the United States. Stars Group is owned by Flutter Entertainment. The report said that, “Clearing up Fox’s FanDuel ownership is a complicating factor that may delay a spinout.” (See Fox Corp stock analysis on TipRanks)
Following the CNBC report, Barclays analyst Kannan Venkateshwar raised the price target from $29 to $38 and reiterated a Hold rating on the stock. Venkateshwar noted that Fox had “significant optionality” in sports betting and internet gaming sector because of its options to acquire stakes in FanDuel and FOX Bet, both of which are held by Flutter.
Venkateshwar added that it also appeared that Fox was looking at buying more assets in the sports betting and gaming space based on “recent news about its interest in acquiring Australian betting company, Tabcorp”.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 analysts suggesting a Buy, 5 analysts recommending a Hold, and 1 analyst suggesting a Sell. The average analyst price target of $35.78 implies around 3.4% downside potential to current levels.
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