In the American state of New York and a local appeals court has reportedly dismissed a lawsuit filed by former investors in FanDuel Group following that company’s 2018 merger with British iGaming behemoth Paddy Power Betfair.
According to a Thursday report from the online news domain at Law360.com, the decision overturned an earlier state court verdict that determined directors of FanDuel Group had conspired with private backers to deprive the shareholders of their rightful profits from the consolidation. However, this latest ruling purportedly found that the sportsbetting giant’s leadership had not consented to New York law and, as such, owed a fiduciary duty to their company rather than to their investors.
Paddy Power Betfair, which is now known as Flutter Entertainment following an early-2020 change of name, reportedly paid an upfront fee of some $158 million so as to combine with FanDuel Group. The source disclosed that this newly-enlarged enterprise then handed out 40% of its shares to investors in the latter firm while keeping the remainder for itself.
In their lawsuit filed in February of 2020, the disgruntled investors reportedly contended that this deal put FanDuel Group ‘in the pole position to capture the budding United States sports gambling market’, which was just getting underway following the revocation of the Professional and Amateur Sports Protection Act (PASPA). But the plaintiffs purportedly moreover alleged that the company’s directors had conspired with private equity firms Shamrock Capital Advisors LLC and KKR and Company to deprive them of their rightful profits from the deal even as the newly-enlarged operator saw its market cap grow to top $2.2 billion.
The plaintiffs, which included a group of approximately 100 former employees of FanDuel Group, reportedly attested that this union had created a sportsbetting ‘juggernaut’ whose future revenues should have rewarded them for their many years of hard work. They purportedly furthermore pronounced that the merger was ‘a perfect marriage’ that saw the market ‘shout in agreement’ at the prospect of being able to take advantage of an American sports wagering market that is today worth something like $83 billion.
Mark Kirsch from King and Spalding LLP represented FanDuel Group in this lawsuit and he reportedly praised the appellate court’s decision, which could have cost his client hundreds of millions of dollars in compensation. The attorney also divulged that the verdict followed a dismissal in Scotland and a January ruling from the New York Supreme Court that determined the matter concerned only current and not former board members.
Reportedly read a statement from Kirsch…
“This is a sweeping victory for our client that confirms the transaction was fundamentally fair and the proceeds were appropriately distributed.”