Investors enjoy Flutter on news of £3bn US deal
INVESTORS put their money on Flutter Entertainment after the gambling giant unveiled plans to speed up its investment in an American sports betting site.
The Paddy Power and Betfair owner will splash out £3.1bn to increase its stake in Fanduel to 95pc several years earlier than planned.
The deal underlines how important the US market has become for British bookmakers.
Sports betting was only legalised there at a federal level in 2018 and has prompted a race for experienced companies to elbow their way into the lucrative new market.
Flutter merged its US business with Fanduel in 2018 and is now exercising an option to buy a bigger chunk of the group.
It will buy the 37pc stake from Fastball Holdings, a group of investors led by private equity behemoth KKR, and the remaining 5pc of Fanduel will be under the control of casino operator Boyd Gaming.
Flutter is offering to pay a mix of £1.6bn in cash and the rest in Flutter shares. To fund the takeover, Flutter will tap the market for £1.1bn. The sports arm of Fox – which owns about 2.6pc of Flutter – will be among those taking part in the fundraising.
Fox Sports has the option to buy almost a fifth of Fanduel in July next year.
Fox boss Lachlan Murdoch – son of media magnate Rupert Murdoch – said that keeping its stake in Flutter signifies its ‘long-term commitment in Flutter, and ongoing confidence in management’s ability to executive against the fast-growing US opportunity’.
FTSE 100-listed Flutter’s other shareholders were similarly enthusiastic about the arrangement – with shares rallying 7pc, or 935p, to 14300p. Flutter’s jump helped push the FTSE 100 higher by 0.4pc, or 26.88 points, to 6490.27, by the close.
The blue- chip index was also bolstered by a surge in mining shares as traders bet on the chances of a global economic recovery next year.
Mining company shares tend to track optimism about economic growth, as countries consume and use more raw materials when things are on the up.
And BT shares rose 6.4pc, or 8.1p, to 134.5p as the company’s plan to roll out cutting-edge fibre broadband across the UK received a major boost.
Melanie Dawes, the boss of telecoms regulator Ofcom, said the firm was unlikely to face any price controls on fibre services until 2031 at the earliest, ensuring there is ‘a compelling investment case’.
Her comments came after Philip Jansen, BT’s boss, vowed to spend £12bn upgrading the connections of 20m homes – but warned that his company would only press ahead if it had a chance of recouping the investment. The FTSE 250 rose 1.3pc, or 254.67 points, to 20132.44, as stocks that fell prey to lockdown sell-offs including Cineworld (up 14.5pc, or 9.24p, to 73p), Easyjet (up 5.1pc, or 44.6p, to 917.2p), Carnival (up 6.2pc, or 86.5p, to 1475.5p) and 4imprint Group (up 6.5pc, or 175p, to 2850p) all advanced.
Ticketing website Trainline also made gains, rising 1.7pc, or 7.8p, to 471.2p, despite finance boss Shaun McCabe flogging £2.9m of shares.
McCabe, who has been with the group since 2016, sold 600,000 at an average price of about 480p. But Hochschild Mining was rocked by chairman Eduardo Hochschild putting a 12pc stake in the company up for sale – though he still owns about 38pc of the gold and silver miner.
JP Morgan placed 61.7m shares in the gold miner at 200p – a £123m stake – at a 16pc discount to its closing share price the day before.
Its stock fell by almost that amount l ast night, tumbling 11.5pc, or 26.8p, to 207p.