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• Sweet Sweet Fantasy, Baby:
Yesterday a bunch of media outlets reported that, after months of rumors and
speculation, DraftKings and FanDuel, the two well-funded fantasy sports
betting startups, were finally, really, truly about to merge. Term Sheet
readers may remember that when the same rumors flared up back in June, we
reported that deal talks were not
serious.
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You won't have that
same debunking here today. This time around my sources say the same thing as
everyone else's: The deal is happening. They're not sure why it's taken so
long.
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It's not a matter of
arguing over price. The startups are valued at around $1.3 billion and $1.2
billion and have agreed to a 50-50 stock deal. Bloomberg and others are reporting
that DraftKings CEO Jason Robins will be CEO and FanDuel co-founder Nigel
Eccles will be chairman of a board that represents each company evenly.
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One major catalyst
for the deal: A $6 million fine for false advertising from the New York
attorney general in October. One source expects that the companies will
announce a new settlement as part of the merger or shortly thereafter. (Worth
noting: Together they have raised more than $1 billion in venture funding,
including from KKR, 21st Century Fox, Comcast Ventures, NBC Sports
Ventures, the MLS, MLB Ventures and the NHL.)
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DraftKings
spokesperson Sabrina Macias didn't deny the deal talks but stressed that it
is not done yet:
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"As we have
stated previously, a potential combination would be interesting to consider.
However, as a matter of policy, we don't comment on rumors or speculation,
and there can be no assurances at this time that any discussion about a
combination would result in an agreement or merger." FanDuel
declined to comment.
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As I wrote last
week, most novel new markets start out with dozens of competitors, but
eventually consolidate down to two, and then, after an intense rivalry, they
merge. Last week Groupon bought LivingSocial. DraftKings and FanDuel is just
the latest example. Up next: music streaming, meal kits, ride hailing…
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• PSA: Selling
your company for $1 billion doesn't automatically mean you're
a billionaire. Selling two
companies for $1 billion doesn't even necessarily make you a billionaire.
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