On November 22, 2023, the US-listed shares of Entain Plc (OTC: GMVHY) saw a surge in value following reports that activist investors had acquired stakes in the company. According to sources, Dendur Capital and Sached Heam Capital, both New York-based hedge funds, have built positions in Entain and are reportedly pushing for changes within the organization.
One of the main demands from the activist investors is for Entain to grant a board seat to Ricky Sandler, the founder of Eminence Capital, which is one of the largest shareholders in the sportsbook operator. Sandler has publicly criticized Entain’s management, particularly denouncing the $750 million purchase of STS Holding in June. He pointed out that the issuance of new stock to fund the deal was a sign of the company’s lack of financial understanding.
The activist investors are also pushing for Sandler to be directly involved in filling several other vacancies on Entain’s board. This move has raised speculation that they could be aiming to pressure CEO Jette Nygaard-Andersen out of her position, amidst heightened criticism of her leadership following the STS acquisition and a disappointing 2023 net gaming revenue forecast.
There are concerns among investors that Entain could be facing regulatory challenges in the UK, its home market, and might become a target for unsolicited takeover bids due to its diminished market capitalization. Additionally, internal issues within the company have raised worries among investors.
One factor that could come into play is Entain’s 50% ownership of BetMGM, a US online sportsbook and iGaming operator. Although the activist investors did not mention BetMGM in their demands, there is a possibility that they could influence Entain to consider divesting its stake in the entity. Notably, Nygaard-Andersen recently suggested that joint ventures do not last forever, and MGM Resorts International would likely be interested in acquiring Entain’s stake in BetMGM.
Overall, the activist activity within Entain could lead to significant changes within the company, with implications for its leadership, strategic direction, and ownership of BetMGM.