Group led by Kenny Alexander acquires share in 888 Holdings
Investment group FS Gaming Investments, spearheaded by ex-GVC CEO Kenny Alexander, declared on Tuesday that they've seized a 6.57% stake in 888 Holdings, the parent company of William Hill.
This move marks the initial significant action by Alexander since his shock departure from GVC in 2020, which later evolved into Entain Plc. FS Gaming Investments also benefits from the financial support of previous GVC Chairman Lee Feldman and Shay Segev. Segev replaced Alexander at GVC and played a crucial role in transforming the gaming firm into Entain through the acquisition of Ladbrokes.
The newly-emerged 888 shareholders believe the gaming company is underestimated due to its almost $2 billion debt and a series of regulatory violations at William Hill that led to some of the heaviest fines ever imposed by the UK Gambling Commission (UKGC).
These regulatory issues surfaced after the departure of CEO Itai Pazner, who stepped down due to concerns about the operator's money laundering regulations. Pazner's resignation came just days after the announcement of Yariv Dafna's departure as chief financial officer. In the two months prior, the Gibraltar-based firm was hit with compliance-related fines by the General Directorate for the Regulation of Gambling, Spain's gaming regulator.
Turbulent 888-William Hill Union
In July 2021, 888 parted with $765 million to acquire William Hill’s non-US assets from Caesars Entertainment.
The acquisition was seen as a smart move due to 888's lack of sports betting exposure and William Hill's reputation as a top brand in the European sportsbook market.
However, the subsequent regulatory blunders and the removal of the stock from the FTSE 350 Index have negatively impacted the shares, which have plummeted by 60% over the past year. This dip has created an opportunity for external investors, such as Alexander's FS Gaming Investments, to intervene and push for change.
888 responded positively to the investment from FS Gaming, stating, “We welcome the investment of FS Gaming, which we believe underscores the substantial value potential in our business.” The board remains confident in its long-term strategy to maximize value for shareholders. They look forward to updating and engaging with all shareholders as they continue to fulfill their strategic and operational priorities.”
Unnamed sources close to the matter told the Financial Times that FS Gaming might force 888 to optimize the integration of William Hill and potentially offer board seats to Alexander and Feldman.
Potential Takeover Target for 888
Activist investors can advocate for a range of changes, including corporate actions such as asset sales or outright sales. Both are considered long-term possibilities for 888.
The company has been the focus of takeover discussions in the past, and there's recent evidence of activist investors pushing for the sale of European sportsbook operators. For instance, Swedish online gaming operator Kindred Group Plc is rumored to be preparing itself for sale, and it's likely that Keith Meister's Corvex Management is involved in this.
Potential buyers for 888 weren't specified, but due to its control of William Hill, the company could attract interest from European rivals as well as private equity firms if it decides to sell itself.
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