- Over a hundred previous employees of FanDuel are suing a few companies after receiving no money from the merger/sale of a business worth over a billion dollars.
- The lawsuit claims that Paddy Power Betfair knew what they were doing when they, along with ex-members of the FanDuel Board of Directors drew up the paperwork for the merger.
- In doing so, they have left all common shareholders with nothing while continuing to profit off of the business.
NEW YORK – FanDuel founders have filed a lawsuit with the Supreme Court of New York against Shamrock Capital and others due to receiving $0 from the sale/merger of their company.
Firm Bartlit Beck LLP has taken on the case to represent previous employees of FanDuel as well as their former CEO and co-founder Nigel Eccles. KKR & Co and prior members of the FanDuel Board of Directors are also named in the suit along with Shamrock Capital.
The complaint filed by the plaintiffs claim that at the time of the sale the defendants placed a value of $1.2 billion on the company. However, when the time came to give out individual shares for the impending sale, its value dropped dramatically to $559 million.
Over 100 ex-employees of FanDuel and the five founders, as well as investors that were part of FanDuel at their very beginnings, are seeking millions of dollars in damages owed to them after receiving nothing from their stakes in the company.
There has been no paperwork to suggest that FanDuel company which was first valued at over a billion dollars had endured a decrease, let alone one that was more than half of the original number. After merging with Paddy Power Betfair in 2018, shareholders with FanDuel had 40% while Paddy Power Betfair received 60% of the shares through the sale/merger.
This is where it gets interesting. From the merger and share percentages, it was said that FanDuel’s “preferred” shareholders receive the first $559 million in the new PandaCo stock they were using since the sale. All “common” stakeholders like the plaintiffs would receive their money after the fact. But, because FanDuel was valued at $559 million, all common stakeholders would receive nothing for their shares.
The documents go on to say that after the merger of the company, the market profited well beyond the $559 million given to the preferred shareholders. Even so, the defendants did not honor their fiduciary obligations within the contract, sticking to that $559 million number and leaving the plaintiffs with nothing.
The plaintiffs claim the value of the company was dropped to what it was because the preferred shareholders knew they could take over the FanDuel side of operations with a 40% stake in the merger, leaving the common shareholders out of the equation entirely.
“Put simply these investors and the board cheated FanDuel employees to give themselves a massive payday,” said Nigel Eccles, a founder and former CEO of FanDuel. “They failed to ask for an independent valuation, failed to hold a shareholder vote and then hid documents from employees and other investors to cover up their misdeeds. Their self-dealing fails any basic fiduciary or moral standard.”
The defendants do not believe there has been any wrongdoing and are ready to put up a fight. In fact, they say they’ve backed the plaintiffs many times in the past. They believe that they will have the facts to show that the claims made against them are without merit.
The FanDuel company continues to flourish and gain value in the U.S. sports betting market. All of the defendants in the case are reaping the benefits in a deal that went very much in their favor while the plaintiffs lost money on a company they put so much into to build it into what it is today.
Now it’s up to the Supreme Court to decide which side to take on the issue.
Christina has been writing for as long as she can remember and does dedicated research on the newly regulated sports betting market. She comes from a family of sports lovers that engage in friendly bets from time to time. During the winter months, you can find Christina baking cookies and beating the entire staff at Mario Kart…the N64 version of course.