Activist investors ‘still evaluating’ Entain

The Financial Times has published another article saying dissatisfaction is growing amid activist investors with Entain CEO Jette Nygaard-Andersen’s leadership, citing interviews with current and former executives, advisers and investors.

It has previously been reported that US activist hedge funds Sachem Head Capital, Dendur Capital and Eminence Capital have built positions in Entain and have rising concerns surrounding the company’s performance.

The Financial Times interviewed more than 20 sources, who noted concern about the value of 11 bolt-on acquisitions completed at a total price of £2bn since Nygaard-Andersen took over the top executive role in January 2021.

One institutional investor described a “headlong rush into non-stop M&A” despite the struggles of Entain’s core business, noting a lack of awareness and general understanding of the economics of the business and shareholder sentiment.

Other sources cited increased travel and use of consultants, noting that Entain corporate costs almost doubled from 2019 to 2022 to £91m.

Management cited stepped-up compliance procedures, higher wages for junior corporate staff and generally rising costs of operating a growing business.

Meanwhile, Entain and MGM Resorts are facing declining market share for their BetMGM joint venture, another source of tension, the article said.

A current executive described “organisational chaos… We don’t have anybody who knows how to operate – forget about gambling – just how to run an operation.”

Entain, the fourth worst among FTSE 100 companies in terms of total return over the trailing two years, posted 23 consecutive quarters of double-digit growth through the fourth quarter of 2021.

Management said it expects to report a low-single-digit per cent decline in full-year online net gaming revenue. It does not expect to see revenue growth again until the second half of next year.

Source: Fantini’s Gaming Report