Paddy Power Betfair - Confirms talks with FanDuel regarding a possible combination of US operations

Davy Research
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Paddy Power Betfair (PPB) is wasting no time in strategically positioning itself for the opening up of the US sports betting market. It has announced that it is in talks with daily fantasy sports (DFS) operator FanDuel that would potentially see the two amalgamate their US businesses. From PPB’s perspective, a deal would bring three key things: an extremely well recognised US brand, an award-winning technology platform that can now be converted to offer real money sports betting and, perhaps most importantly of all, a database of over 6m sports-loving US customers. In our view, these customers would be very likely to sports bet once individual state markets open up. From FanDuel’s perspective, it would gain access to all that PPB can bring to the table — its pricing models, its risk and trading expertise, its potential distribution via TVG and its expertise with respect to cross selling. Therefore, for both sides, a deal would make a huge amount of sense strategically. What the implied valuation will look like remains to be seen but, on the face of it, an amalgamated business would represent a powerful combination in the US sports betting market.