Troubled Entain appoint Wall Street activist to board in bid to soothe investor unrest
Entain has appointed Eminence Capital founder Ricky Sandler to a non-executive role on its board of directors as investors wrestle for more control.
It comes just a couple of weeks after head honcho Jette Nygaard-Andersen stepped down from the betting company following the resolution of a prolonged bribery scandal.
Soon after this, the Sunday Times reported that the Ladbrokes and Coral owner intended to appoint Sandler to its board.
In June 2023, the chief of investment company Eminence sent a letter to Entain’s board of directors, openly critical of Nygaard-Andersen.
Sandler attacked the $750m (£594m) takeover of STS Holding S.A – Poland’s largest bookies – saying his company was “disappointed” that Entain issued new stock and that this was a “shareholder value destroying strategy.”
Eminence noted that Entain has “two very valuable assets” in its international business and 50 per cent stake in BetMGM. But it wanted to ensure “management do not make any further value destructive decisions”.
The appointment of Sandler, who is expected to help choose two new non-execs, could be seen as a way of calming other activist investor jitters too. Two hedge funds Dendur Capital and Sached Heam Capital recently took stakes in the entertainment company, both saying they wanted Sandler on the board.
In the second quarter last year, Eminence Capital owned about 2.1 per cent of Entain’s outstanding shares although it has since upped that to around 4.3 per cent, City PM understands. Sandler’s board role means Eminence cannot acquire a stake above eight per cent.
He said: “I look forward to working with my fellow directors to help Entain achieve long-term success and create lasting value for its shareholders.”
Jefferies analysts said Sandler’s comment “may imply that a short-term solution may not be top of Eminence’s agenda.”
The move could potentially swing the door open to a full or partial sale of Entain’s stake in BetMGM, which MGM Resorts International owns the other half of.
Sandler previously suggested that Entain could sell its BetMGM stake to bolster finances and prioritise established markets like Australia, Europe, and the UK.
MGM Resorts International is keen on full control so it might consider negotiating a buyout of Entain, a potentially more cost-efficient move than an outright purchase of the company.
Entain chairman Barry Gibson said: “I am pleased to welcome Ricky to the Board of Entain. Ricky has a deep knowledge of our business and a firm belief in the quality of our operations and substantial growth opportunities.”
Shares nudged up 1.3 per cent on Wednesday morning.
AJ Bell investment director Russ Mould said Entain “needs to find some direction” after the departure of Nygaard-Andersen last month.
“At least last year’s conclusion of a HMRC probe into a legacy business in Turkey provides the company with something of a clean slate from which to try and get earnings on an upwards trajectory,” he said.