PADDY Power Betfair has revealed it has struck a “definitive” deal to acquire FanDuel, the Edinburgh-based fantasy sports company.

The deal, which follows an initial approach by the betting giant to FanDuel earlier this month, will see Paddy Power Betfair contribute its existing US assets along with $158 million (£119m) of cash. Betfair US had gross assets of $621m at December 31.

The cash will be used to pay down FanDuel’s existing net debt, which stood at $76m at March 31, and to provide working capital for the combined group.

Paddy Power Betfair made its move following a much-anticipated judgement handed down by the US Supreme Court, which found that a ban on sports betting in the state of New Jersey was unconstitutional. As well as lifting a regulatory burden for FanDuel, which has faced court battles in several US states over the legal status of its games, it opened the market to betting firms such as Paddy Power Betfair.

Paddy Power Betfair will own 61% of the combined business, with the existing FanDuel investors owning 39%. A statement to the stock market said: “All material investors are rolling their investment into the combined business.”

FanDuel will become a subsidiary of Paddy Power Betfair, which will have the right to appoint a chief executive and a board of directors. Existing FanDuel directors will continue to have board representation.

FanDuel was founded by Nigel Eccles, Lesley Eccles, Tom Griffiths, Rob Jones and Chris Stafford in 2009. The founders saw their shareholding erode after a proposed merger with US rival DraftKings collapsed. However, all five retained sizeable shareholdings in the company.