FanDuel Founders Challenge Board in Expanded Suit over Flutter Deal

The plaintiffs alleged private equity investors "completely wiped out FanDuel common shareholders’ interests in the company"Image Source: Shutterstock.com

FanDuel’s cofounders, early investors and employeesrecently filed an amended complaint in New York, alleging that board members, controlled by private equity investors deprived them of significant profits from the company following its 2018 sale to Paddy Power.

At the time, FanDuel was valued at $559 millionand merged with Paddy Power. Later on, Paddy Power completed a rebrand to Flutter Entertainment. Unlike the assessment at the time, FanDuel is now valued at a sum north of $20 billionand is at the helm of sports betting in the United States.

The legal battle between the cofounders of FanDuel and equity investors, including Shamrockand KKR, among others, has been ongoing for years. A legal claim was initially filed in Scotland. After going back to the US, earlier this year, the New York’s Court of Appeals gave a green light for the lawsuit to proceed.

The list of plaintiffs includes FanDuel’s cofounders Nigel Eccles, Lesley Eccles, Robat Jones, Thomas Griffithsand Chris Stafford. Also listed as plaintiffs are dozens upon dozens of early investors and employees, who also sided with the founders for the legal claim. In the lawsuit, the plaintiffs alleged the defendants: “secured for themselves and other preferred shareholders 100% of FanDuel’s equity in the new merged company along with the massive return it represented.”

Moreover, the plaintiffs wrote: “In turn, Defendants completely wiped out FanDuel common shareholders’ interests in the companythat they had built into a billion-dollar enterprise, and excluded FanDuel’s founders, employees, and early investors from any ongoing investment in the newly merged company.”

Early Investors and Shareholders Deprived of Their Profits

The legal filing alleged that the defendants “conspired to assign an artificially low value to the 40% equity interest in the merged company that FanDuel and its shareholders received in the merger.”

The founders and early shareholders allege Shamrock and KKR sought to deprive them of their profits. Supporting their claim, the plaintiffs said that two years later, the 40% sngake in FanDuel was sold to FanDuel Group for $4.2 billion, a sum significantly higher than the initial valuation.

In their lawsuit, the plaintiffs claim that KKR “enriched itself by approximately $250 million,” while Shamrock benefitted from approximately $100 million.

“Standing up against the likes of KKR is not easy, but I’m determined that the team of 100+ amazing people who spent years building FanDuel from the ground up will get back what was stolen from them in 2018. Link to the full complaint in the reply below,“

reads a statement released by Nigel Eccles

Nigel Ecclestook to his personal page on X, formerly Twitter, to discuss the topic. He described several details about the ongoing lawsuit explaining his position and the position of the other founders and early investors in FanDuel.

Eccles wrote that while the fight will be difficult, he enjoys the support of more than 100 peoplewho helped build FanDuel. Finally, he said he hopes the legal action will help all those investors ngake what was stolen from them in 2018.