US-based Corvex has acquired approximately 28 million shares of Entain amidst the recent resignation of CEO Jette Nygaard-Andersen.
Corvex views this management change as a necessary step for Entain, which it believes is currently facing unacceptable performance issues.
Corvex, armed with substantial industry and company-specific experience, aims to engage constructively with Entain’s leadership to drive value and bring about further changes.
The leadership shift at Entain was announced on December 13th, with Stella David stepping in as the interim CEO, while the search for a permanent replacement begins.
Nygaard-Andersen had been at the helm since January 2021, succeeding Shay Segev, who left to join sports streaming platform Dazn.
Stella David, a non-executive director at Entain, is described as an intensely commercial leader who is expected to help the company achieve its strategic goals.
Despite resolving a longstanding case with the Crown Prosecution Service (CPS) related to historic activities in Turkey, Entain’s future remains uncertain.
The company agreed to a deferred prosecution agreement (DPA), requiring a total payment of £585.5 million, a £20 million charitable donation, and contributions to HMRC and CPS costs over four years.
Goldman Sachs recently downgraded Entain’s rating to “sell” from “buy” due to concerns about business growth, particularly within its online division.
Projections indicate negative growth in Q4 of 2023 and H1 of 2024, with a return to growth expected only in the second half of the following year.
Earnings per share estimates for 2024 and 2025 have been revised down by approximately 30%, while free cash flow has also deteriorated.
Despite a strong H1 in 2023, Entain’s Q3 update revealed slowing online net gaming revenue growth.
The BetMGM joint venture with MGM Resorts, with an 18% market share in US states, showed minimal growth from Q2 to Q3.
BetMGM expanded into the UK in collaboration with LeoVegas, having acquired LeoVegas for $604 million the previous year.
During this period, Chairman Barry Gibson and Jette Nygaard-Andersen increased their shareholdings, and Brenda Gibson, the chair’s spouse, also expanded her holding in Entain.
However, Nygaard-Andersen faced criticism for her leadership, with concerns about slow revenue growth and increasing regulatory obligations.
Her tenure included significant M&A deals, such as the acquisition of Polish sportsbook operator STS Holding and the finalization of the Angstrom Sports acquisition, which aimed to benefit BetMGM’s expansion in the US.