{"id":128260,"date":"2020-02-27T14:57:47","date_gmt":"2020-02-27T22:57:47","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=128260"},"modified":"2020-02-27T15:18:32","modified_gmt":"2020-02-27T23:18:32","slug":"fanduel-creators-say-kkr-shamrock-cheated-them-in-merger","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/","title":{"rendered":"FanDuel Creators Cry Foul in KKR, Shamrock Suit, Private Equity Firms Sing Different Tune"},"content":{"rendered":"

Founders and early stage employees and funders of daily fantasy sports (DFS) giant and sportsbook operator FanDuel are continuing a legal challenge against KKR and Shamrock Capital. They are alleging those firms left the company’s creators, staffers, and startup investors out in the cold following the 2018 marriage with Paddy Power Betfair.<\/p>\n

\"\"
FanDuel founders and others are suing two private equity firms, alleging they were cheated out of money in a 2018 merger. (Image: Bergen Record)<\/figcaption><\/figure>\n

A suit filed in Manhattan State Supreme Court earlier this week, listing dozens of plaintiffs, including FanDuel founders Nigel and Leslie Eccles and Thomas Griffiths, contends that private equity firms KKR & Co. Inc. (NYSE: KKR) and Shamrock Capital intentionally valued FanDuel’s stake in Paddy Power at $559 million \u2013 far less than what the plaintiffs<\/a> believe their roughly 40 percent interest in the combined company is worth.<\/p>\n

\u201cThis case is about how the benefits of the Paddy Power Betfair merger were taken by the Defendants,\u201d according to court documents obtained by Casino.org<\/i>. \u201cDefendants\u2019 late-stage investments entitled them to the first $559 million from the deal; Plaintiffs, which include FanDuel\u2019s founders, early investors, and more than 100 former employees, were entitled to share in everything above that threshold.\u201d<\/p>\n

The plaintiffs argue that KKR and Shamrock valued the DFS company at $1.2 billion \u2013 the value of a proposed 2017 merger between FanDuel and rival DraftKings<\/a> that was later scrapped due to regulatory concerns.<\/p>\n

The complaint also notes that Paddy Power saw its market capitalization jump $2.2 billion in the weeks following its proposed takeover of FandDuel.<\/strong><\/p>\n

Hitting Back<\/h2>\n

KKR \u2013 one of the largest private equity firms \u2013 and Shamrock aren’t taking the FanDuel group’s latest legal effort laying down.<\/p>\n

\n

\u201cKKR and Shamrock stood by and supported the company during difficult times,\u201d said the firms in a statement. \u201cWe are confident that the facts will demonstrate that the allegations in this lawsuit are completely baseless.\u201d<\/p>\n<\/div>\n

In July 2015, FanDuel announced the closure of a Series E financing round, which included raising $275 million from an investor group led by KKR<\/strong> that included \u201ca number of NFL and NBA team owners participated in the round, along with previous investors, including Shamrock Capital, NBC Sports Ventures, Comcast Ventures, Bullpen Capital, Pentech Ventures, and Piton Capital.\u201d<\/p>\n

At that time, KKR said it was \u201cthrilled to support\u201d FanDuel, while Nigel Eccles said that investor roster was a \u201cgame changer.\u201d<\/p>\n

Far From Over<\/h2>\n

The plaintiffs assert that KKR and Shamrock rushed to close the deal with Paddy Power, and that the $559 million the private equity firms priced FanDuel at didn’t fully maximize the company’s leverage<\/a> to the booming sports betting market.<\/p>\n

\u201cDefendants deprived Plaintiffs of the ability to share in the upside of the new FanDuel Group\u2014a multi-billion-dollar enterprise fueled by the brand, platform, and user base that Plaintiffs built and were entitled to as FanDuel common shareholders,\u201d according to the court document.<\/strong><\/p>\n

B<\/span><\/span>artlit Beck, counsel for the plaintiffs, expects the private equity firms will seek a change of venue because FanDuel was previously incorporated in Scotland, though its day-to-day operations were mostly run out of New York.<\/p>\n

The law firm also predicts that KKR and Shamrock will challenge FanDuel’s solvency prior to their investments, contending that the DFS company was on thin ice prior to attaining the capital provided by those investors.<\/p>\n","protected":false},"excerpt":{"rendered":"

Founders and early stage employees and funders of daily fantasy sports (DFS) giant and sportsbook operator FanDuel are continuing a legal challenge against KKR and Shamrock Capital. They are alleging those firms left the company’s creators, staffers, and startup investors out in the cold following the 2018 marriage with Paddy Power Betfair. A suit filed […]<\/p>\n","protected":false},"author":46,"featured_media":128269,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[60,32093],"tags":[],"acf":[],"yoast_head":"\nFanDuel Creators Say KKR, Shamrock Cheated Them in Merger<\/title>\n<meta name=\"description\" content=\"FanDuel founders and early investors said in a new suit that two private equity firms cheated them out of money in the Paddy Power Betfair merger.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FanDuel Creators Say KKR, Shamrock Cheated Them in Merger\" \/>\n<meta property=\"og:description\" content=\"FanDuel founders and early investors said in a new suit that two private equity firms cheated them out of money in the Paddy Power Betfair merger.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2020-02-27T22:57:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-02-27T23:18:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/02\/fd.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1600\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/\",\"url\":\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/\",\"name\":\"FanDuel Creators Say KKR, Shamrock Cheated Them in Merger\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/02\/fd.jpg\",\"datePublished\":\"2020-02-27T22:57:47+00:00\",\"dateModified\":\"2020-02-27T23:18:32+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"FanDuel founders and early investors said in a new suit that two private equity firms cheated them out of money in the Paddy Power Betfair merger.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/fanduel-creators-say-kkr-shamrock-cheated-them-in-merger\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/02\/fd.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2020\/02\/fd.jpg\",\"width\":1600,\"height\":800,\"caption\":\"FanDuel founders and others are suing two private equity firms, alleging they were cheated out of money in a 2018 merger. 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Todd got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long\/short hedge fund, where he specialized in the trading sector and international ETFs leading up to and during the financial crisis. He joined Casino.org in 2019. Currently, Todd analyzes, researches, and writes on ETFs for various web-based publications and financial services firms. Shriber has been featured and quoted in Barron's, CNBC.com, and The Wall Street Journal. His work can also be found on Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com. He currently resides in Las Vegas, where he enjoys golf and taking his black lab to the dog park. He's also an avid sports fan and likes to wager on college football and the NBA. You can also find him at the three-card poker and roulette table, even though he knows better. 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