Reports indicate that fantasy sports firm FanDuel is holding discussions with a view to going public. However the fantasy sports company will not do an IPO but rather a reverse merger with special purpose acquisition company Platinum Eagle Acquisition Corp. Earlier this year Platinum raised approximately $300 million in order to acquire another firm.
This comes months following the announcement by the founder and chief executive officer of FanDuel, Nigel Eccles, that he would be stepping down to pursue other opportunities. The chief financial officer of FanDuel, Matt King, will be taking over as CEO.
Though the deal terms were not clear two years ago FanDuel disclosed that its fully-diluted value was $1.2 billion. If the reverse merger indeed occurs it will help in solving FanDuel’s financial issues. Currently the fantasy sports firm is backed by the NBA, NBC Sports, Comcast Ventures and KKR & Co. In seven funding rounds FanDuel has raised more than $416 million
The fantasy sports company was founded in 2009 in Scotland and in 2011 set up its headquarters in New York. Currently the user base of the app is more than six million with most of the users being male. About 90% of the users are millenials with about 65% being under 40. On average the users of the app are known to spend around 8 hours on the app per month.
Fantasy sports market
Last year FanDuel was on the verge of a merger with rival fantasy sports firm DraftKings but the move was cancelled after opposition from federal regulators. This was on the grounds that the resulting entity would have control on over 90% of the daily fantasy sports market in the United States. At the time the acting director of Federal Trade Commission’s Bureau of Competition, Markus Meier, hailed the cancellation saying it was in the benefit of fans of fantasy sports.
“For years, the vigorous competition between DraftKings and FanDuel has spurred innovation and favorable pricing. If this merger had been allowed to go through, those benefits would likely have been lost,” said Meier.
Though it came onto the scene three years after FanDuel’s founding, the Boston, Massachusetts-based DraftKings, has managed to beat its older rival with regards to revenues and entry fees. But even after cancellation of the planned merger Eccles insisted that the deal would have benefited the broader industry as well as consumers since it would have boosted product development and investments.