Boston-based online daily fantasy sports provider DraftKings is reportedly close reaching an agreement with New York rival, FanDuel. This past October, the governances of the two rival companies started discussing the possibility of merging in order to create an outright market-leading enterprise. DraftKings went as far as releasing a statement on November 1 claiming that “a potential combination would be interesting to consider.”
Dan Primack, a former Fortune finance editor, reported yesterday that FanDuel and DraftKings have come to an agreement to merge their companies citing sources close to the two organisations. According to Primack, the management of FanDuel and DraftKings will release a formal announcement of their agreement within a week.
In the words of the former finance editor, DraftKings’ Chief Executive Jason Robins will lead the combined enterprise while Nigel Eccles, founder of FanDuel, will occupy the position of Board Chairman.
The rivals have reportedly agreed on a 50/50 partnership, with each of the companies’ core investors receiving three board seats within the new enterprise. No new equity investments will be included in the combined company after the merger takes place.
Primack also revealed DraftKings and FanDuel’s deal will be strictly reviewed by regulators and went on to say the companies have taken care of all the specifics on possible “integration issues like branding.”
According to previous reports, the potential merger will bring about a new round of financing, yet Primack argues this will not be the case according to his sources. In September 2016, DraftKings raised a massive new round of funding and collected $153 million from its investors, including Steve Case’s Revolution Growth and the Kraft Group. At the time, Primack commented the new round of funding caused DraftKing’s valuation to drop lower than the nearly $2 billion value the company boasted after raising last summer’s round.
The two companies have been engaged in a fierce competition for the past few years. This is hardly the first time their Chief Executives discuss the notion of joining forces. Reports on the joint venture became more frequent at the end of October, 2016 when the rival companies succeeded in settling a deceptive-advertising lawsuit from New York Attorney General, Eric Schneiderman. The court ordered the two companies to pay a combined fine of $12 million and cautioned them they would have to undertake “sweeping reforms” in their marketing operations.
FanDuel and DraftKings’ merger is yet to be confirmed as the governances of the companies have not released an official statement about closing the deal. When addressed, DraftKings’ spokeswoman declined to comment.
