The US-based investment firm Corvex has acquired approximately 28 million shares of Entain, a gaming and sports betting company. This comes after the resignation of Jette Nygaard-Andersen as CEO of Entain. Corvex believes that the change in management is a necessary first step, but more changes are needed due to Entain’s recent underperformance.
Corvex intends to engage with chairman Barry Gibson and interim CEO Stella David to drive value and bring about further change. Entain announced Nygaard-Andersen’s resignation and named David as the interim CEO. Entain is now actively searching for a permanent replacement for the CEO position.
Despite settling a case involving historic activities in Turkey, Entain still faces challenges. The investment bank Goldman Sachs downgraded Entain to sell from buy, citing concerns about business growth, particularly in the online division. Goldman Sachs predicts negative online growth for Entain in the fourth quarter of 2023 and first half of 2024. The company is not expected to return to growth until the second half of next year. Additionally, earnings per share estimates for 2024 and 2025 have been reduced by approximately 30%.
Entain reported record results in the first half of 2023, but its online net gaming revenue growth slowed in the third quarter. The company’s joint venture with MGM Resorts, BetMGM, holds an 18% market share in US states. However, BetMGM recently expanded into the UK without the involvement of Entain.
Prior to her resignation, Nygaard-Andersen faced criticism for slow revenue growth and increased regulatory obligations. As CEO, she oversaw major M&A deals, including the acquisition of Polish sportsbook operator STS Holding and Angstrom Sports.
Despite the challenges, Corvex believes that Entain can benefit from the expertise and experience of a well-informed shareholder. The company hopes to be a force for change and drive value for Entain.
