Entain, a prominent player in the gaming and betting industry, has sought the advisory services of Wall Street firm Moelis for guidance on potential asset divestitures, as reported by the Financial Times.
This strategic move comes in the aftermath of the company disclosing a substantial net loss of £936.5m for the fiscal year 2023, detailed in its annual earnings report on March 7.
The decision to potentially offload assets stems from Entain’s desire to streamline its operations following an aggressive expansion phase, highlighted by acquisitions such as the controversial purchase of STS in 2023, which faced opposition from shareholder Eminence Capital.
Entain’s strategy prioritizes the sale of assets that are not fully integrated into its core platform, which notably contributed to nearly a third of its net gaming revenues in the initial half of the previous year.
Assets under consideration for sale include notable names such as BetCity, acquired for £398m in 2023, alongside Ladbrokes Australia, Enlabs in the Baltic region, and CrystalBet in Georgia.
The divestiture of these brands aims to refocus Entain’s efforts on its principal markets, notably the UK and the US, where it operates BetMGM in collaboration with MGM Resorts since 2018.
The year 2023 proved challenging for Entain, with its ambitious strategy in sports betting mergers and acquisitions casting doubts over its future and leading to the departure of CEO Jette Nygaard-Andersen.
Despite a significant rise in net gaming revenue, a hefty HMRC settlement resulted in a net loss, as announced in November and concluded in December, amounting to £936.5m.
The settlement requires Entain to pay £585.0m, make a £20.0m charitable donation, and cover £10.0m in CPS and HMRC costs, all of which were accounted for in the 2023 financial outcomes.
Chairman Barry Gibson remains optimistic about Entain’s long-term growth, describing 2023 as a year of positive transition.
The company has not only improved its revenue quality but also resolved a significant regulatory issue.
With total group revenue and net revenue showing an 11% increase, Entain’s core markets, including the UK, Italy, Australia, New Zealand, Europe, and other regions, have demonstrated robust growth.
The online business segment, in particular, saw a 23% increase in customer base, reaching a record high.
Furthermore, Entain’s joint venture with MGM Resorts International, BetMGM, nearly reached $2.00bn in revenue for 2023, securing a 14.0% market share in sports betting and igaming.
However, a noteworthy development was MGM’s decision to launch BetMGM in the UK in partnership with LeoVegas instead of Entain, marking a significant shift in the collaboration dynamics between the two companies.