By Dylan Martin
November 16, 2016
Boston-based DraftKings and New York-based FanDuel have reached an agreement to merge, Dan Primack reported Wednesday afternoon, citing three sources. Primack later tweeted that a formal announcement is expected within a week.
A spokeswoman for DraftKings declined to comment. However, the company has recently entertained the prospect of a merger, saying in a Nov. 1 statement that "a potential combination would be interesting to consider."
The news of the agreement comes after months of rumors and speculation that the two daily fantasy sports companies would merge, though there are still questions as to whether such a merger would be challenged by U.S. antitrust regulators.
Both companies are recovering from nearly a year of legal and regulatory challenges over whether their activity constitutes as skill-based gaming or gambling (the two companies say the former). As the two biggest daily fantasy sports companies, they have also spent significant resources in marketing and advertising as they contend for many of the same users.
The report from Primack, previously an editor for Fortune's Term Sheet, confirms one of the major details that emerged in recent rumors: DraftKings CEO Jason Robins will be the CEO of the combined company while FanDuel CEO Nigel Eccles will act as chairman. In addition, three board seats will be given to each of the company's existing investors, which Primack said "reflects how this is effectively a 50/50 merger from an equity perspective."
Primack also reported that both companies are expecting the deal to be fully reviewed by regulators. As such, he said the companies have ironed out any specifics on "various integration issues like branding."
While it was previously reported that a merger would come with a new round of financing, Primack said that will not be the case, according to his sources. Back in September, DraftKings announced it had raised a new, $153 million round from investors, including The Kraft Group and Steve Case's Revolution Growth. Primack reported at the time that the round brought DraftKings' valuation lower than the roughly $2 billion value it had after raising last summer's round.
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