Entain has seen Ricky Sandler join the board and could push for a sale of BetMGM
Entain Plc (OTC: GMVHF ) is reportedly considering adding Eminence Capital founder Ricky Sandler to its board of directors. The move could open the door for the operator to sell all or part of its 50% stake in BetMGM.
Entain may add Sandler to its board this month, the Sunday Times reported, citing unnamed people familiar with the matter. The rumors surfaced less than a week after the Coral owner announced the "immediate resignation" of CEO Jette Nygaard-Andersen, an executive who has publicly criticized Sandler.
He criticized the $750 million acquisition of STS Holding in June, saying issuing new shares to finance the deal showed Entain didn't understand basic financials or suggested investors were naive. Eminence Capital held 2.1% of Entain's free float shares at the end of the second quarter.
Assuming Entain appoints Sandler to its board of directors, this could be seen as an attempt to appease activist investors Dendur Capital and Sached Heam Capital. The two hedge funds, which recently took stakes in the gaming company, said they wanted to appoint Sandler to the board, adding that Entain should ask him to fill other vacant board positions.
Interesting timing for Entain
In addition to rumors that Sandler will join the Entain board immediately following the resignation of Jette Nygaard-Andersen, this comes just three days after Keith Meister announced that Corvex management was buying 4.4% of the company to take over the gaming company , the rumor also surfaced.
This may be worth noting because Corvex is a significant investor in MGM Resorts International (NYSE: MGM ), which is Entain's 50/50 partner in BetMGM. Additionally, Meister serves on the casino operator's board of directors.
Sandler has previously suggested that Entain should sell all or part of its BetMGM stake to raise capital and refocus on markets where the company is already firmly established, including Australia, Europe and the UK. MGM has made no secret of its desire to take full control of BetMGM and may be willing to negotiate a takeover of Entain, which would be more cost-effective than buying out the Ladbrokes owner.
Entain Meister will not be appointed to the board as he sits on the boards of BetMGM and MGM, The Sunday Times reported.
Might be a good time to Entain to Mull BetMGM promotion
It remains to be seen whether Sandler will gain a seat on Entain's board and the changes he and his fellow activist investors have promised. However, now is arguably the perfect time for the gaming company to consider divesting some or all of its BetMGM positions.
The internet casino and online sports betting operator continues to grow in profitability, targeting earnings before interest, taxes, depreciation, and amortization (EBITDA) of $500 million by 2026.
Instead, BetMGM is approaching self-funded status, meaning Entain will no longer be dependent on further capital investments in the online gaming company. That would likely allow Entain to keep its stake in the company attractive unless MGM's potential offer for the stake becomes extremely attractive.
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Source: www.casino.org
