After a tumultuous 2023, Entain hopes the appointment of activist investor Ricky Sandler will ease investor concerns.
Entain, the parent company of Ladbrokes, bwin, Coral — and a co-owner of BetMGM — struggled with leadership issues for the better part of last year. Its difficulties didn’t escape the notice of investors, including activist investor Ricky Sandler.
Entain’s stormy 2023
Sandler’s hedge fund company, Eminence Capital, holds a stake in Entain. Sandler was particularly upset when Entain bought Poland-based sports betting operator STS Holdings. It wasn’t the acquisition, per se, that Sandler thought was unwise, as he instead objected to Entain’s method of payment for the operator.
Entain issued new shares to raise money for the purchase, diluting the value of existing shares, and its share price dropped more than 10% on the day of the announcement. Sandler was so disappointed with the move — and the loss of his shares’ value — that he issued an open letter to Entain’s Board of Directors back in June.
Investor confidence took another hit when the company was forced to pay £585 million to settle a longstanding bribery claim. Entain secured a deferred prosecution agreement with the United Kingdom’s Crown Prosecution Service (CPS) following alleged bribery at the company’s former Turkish business.
Entain CEO Jette Nygaard-Andersen stepped down from her position soon after. Stella David, a non-executive director, is currently serving as interim CEO until a permanent replacement is named.
The silver lining
Meanwhile, 2024 should be a calmer year for Entain.
After the announcement of Sandler’s board appointment, Entain’s share price jumped more than 2%. Under the terms of his appointment, Sandler is entitled to help select a non-executive director to the board who will be “mutually agreeable to Eminence and the company.
Despite last year’s turmoil, Entain — and its joint venture BetMGM — turned in a solid performance. In the third quarter, BetMGM generated $458 million in revenue, up 15% from the third quarter of 2022.
The company also expects BetMGM to be EBITDA-positive in the second half of 2023.
Room for growth
Entain has rebuffed offers in the past. In 2021, Entain rejected a $11 billion offer from MGM. Later that same year, DraftKings was dissuaded from making a $22 billion bid for the company.
However, a new CEO and a more amenable board could be more open to a merger or acquisition, and that might please at least one activist investor.
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