runarcherykr20

FanDuel's co-founders are stepping up their legal battle to make up for the loss of a stake in a company bought by European bookmaker Paddy Power Betfair, now known as Flutter Entertainment, in 2018.

Co-founders Nigel Eccles, Leslie Eccles, Thomas Griffiths, Robat Jones and Chris Stafford, joined by numerous early investors and former employees, claim board members influenced by private equity firms KKR and Shamrock Capital have secured "100% of FanDuel's shares in the new merger company" for themselves and other preferred shareholders, away from the significant financial growth the company experienced since the merger.

Origins and implications of 2018 sales

The controversial sale transferred 61% ownership of FanDuel to Paddy Power, pegging FanDuel's stake in the combined corporation at $559 million. Today, the company's valuation has soared to more than $20 billion, making it a giant in American sports gambling. The plaintiff alleges that the 2018 valuation was intentionally underestimated to minimize dividends to initial shareholders.

Despite being promised a 40% stake in the merged Panduel Group, the unfair valuation claims that as preferred shareholders, KKR and Shamrock benefited exclusively from the terms of the merger stipulated in the company's bylaws, effectively wiping out the stakes of early shareholders.

Legal Journey and Status

Originally filed in a Scottish court, the lawsuit is active on both sides of the Atlantic in the face of various legal hurdles. It was only recently that a New York appeals court in May overturned an earlier dismissal and allowed the lawsuit to continue. The expanded charges now include detailed charges of trustee violations, fraud, conspiracy and bribery under Scottish law, as Nigel Eccles sets out.

The co-founders and their co-appeals are now seeking a jury trial aimed at receiving punitive damages and compensatory damages in excess of $500,000, along with displeasure with what the defendants describe as "wrong gain."

KKR declined to comment when asked by Front Office Sports about the ongoing legal proceedings, while Shamrock did not respond at all. In a joint statement in 2020, both companies defended their actions, arguing that the claims were baseless and highlighting their support for the company during a period of financial instability before 2018.

As FanDuel's business thrives following the abolition of PASPA, it recently reported solid earnings that exceeded expectations. The lawsuit is a significant chapter in the company's history, highlighting the complexities and conflicts that can emerge in high-stakes mergers and acquisitions in the fast-evolving sports betting industry. 홀짝게임