Entain, a leading global sports betting and gaming entertainment operator, experienced a nine percent leap in its American depositary receipts in a recent trading session. This surge in its international stock value was triggered by burgeoning rumors of private equity firms set to swoop in and bid for some of its prized gaming company’s assets.
Industry insiders had their ears to the ground when a British newspaper, The Times, released an article hinting at private equity bigwigs like Apollo Global Management and CVC Capital as potential bidders. The British betting brand Ladbrokes, a subsidiary of Entain, has confirmed an internal strategy suggesting it might consider selling off some assets. The imminent exit of Chairman Barry Gibson from the gaming company by the end of September has sparked heightened speculation around this move.
Recent developments reveal that Entain sought the expertise of financial advisory firm Moelis last month to help strategize potential divestitures. The advisory exercise focused on gaming brands in dire need of a reboot, and mentioned BetCity, Enlabs, Ladbrokes Australia, and CrystalBet, a Georgia-based brand, as likely candidates for this shakeup.
The motivation for this restructuring comes in part from activist investors, featuring individuals like Ricky Sandler, founder of Eminence Capital, who have been advocating for a radical change in Entain’s strategy. The company had been under fire for a spate of slip-ups, and former CEO Jette Nygaard-Andersen has been on the receiving end of criticism for an arguably misguided acquisition spree. Sandler’s recent appointment to the board of directors hinted at an imminent shift away from the past and towards a more strategic future.
Between the pair of Apollo Global Management and CVC Capital Partners, there will be no dearth of formidable bidders for Entain’s gaming brands. Their impressive portfolios and domain knowledge promise healthy competition. CVC Capital was the previous owner of Sky Bet and controls a majority stake in Tipico, a prominent German sportsbook. In Apollo’s case, the firm is renowned for operating the majestic Venetian casino on the Las Vegas strip and has a solid track record in the gaming industry.
No stone has been left unturned in speculating which of Entain’s assets would pique the potential bidders’ interests, given the company’s expansive portfolio featuring brands like Bwin, Coral, Ladbrokes, Partypoker, PartyCasino, SportingBet, and SuperSport.
Entain’s half-ownership of prominent player BetMGM is also an attractive proposition for private equity firms. With the forthcoming liberalization of Brazil’s online betting market and SportingBet’s established footprint in South America, the industry is abuzz, guessing which assets may be auctioned off.
However, the future of Entain’s stake in BetMGM remains a subject of conjecture. Former CEO Jette Nygaard-Andersen had, previous to her departure, hinted that joint ventures like this one are not intended to last forever. There are whispers that MGM Resorts International, which owns the other half of BetMGM, has expressed interested in acquiring the remaining stake. Yet they’ve ruled out resuming takeover talks with Entain after a failed bid last year.
Adding another layer to the unfolding drama, Keith Meister’s Corvex Management secured a 4.4% stake in Entain last December. Coupled with the fact that Meister also sits on the board of MGM and his company is an investor in that firm, these developments have sent the rumor mill into overdrive pointing towards a possible offer for the remaining stake in BetMGM.
