Former employees and founders of on the net athletics betting firm FanDuel are suing Shamrock Capital Advisors and KKR & Co. alleging they colluded to undervalue the company’s shares just before a merger with Paddy Power Betfair in 2018.
The plaintiffs involve much more than a hundred previous employees, cofounder and previous chief govt officer Nigel Eccles, and cofounders Lesley Eccles, Tom Griffiths, and Chris Stafford. The team alleges that the non-public equity corporations and buyers picked a price tag for the firm in its merger with Paddy Power that would not exceed $559 million.
Under the conditions of their investment, the non-public equity corporations and late-phase buyers ended up entitled to the 1st $559 million of proceeds from a takeover, whilst common shareholders ended up entitled to almost everything higher than that total, like a 40% share of the recently made FanDuel Group.
“Put only these buyers and the board cheated FanDuel employees to give on their own a significant payday,” Nigel Eccles mentioned. “They failed to inquire for an impartial valuation, failed to maintain a shareholder vote, and then hid documents from employees and other buyers to cover up their misdeeds. Their self-working fails any primary fiduciary or moral conventional.”
The Paddy Power merger reportedly valued FanDuel at $465 million. The suit suggests FanDuel was valued at $1.2 billion just before a proposed merger with rival DraftKings fell as a result of in 2017.
The plaintiffs allege that the non-public equity corporations stored the valuation down to continue to keep comprehensive possession of the 40% stake in FanDuel Group.
“KKR and Shamrock stood by and supported the firm through tricky occasions and we are self-assured that the info will demonstrate that the allegations in this lawsuit are wholly baseless,” Shamrock Capital Advisors and KKR & Co mentioned.
A past lawsuit submitted in Scotland by the proprietors of the firm was not productive.