Meister's Corvex management acquires 4.4% stake in Entain
Less than 24 hours after Jette Nygaard-Andersen resigned as CEO of Entain (OTC: GMVHY ), Keith Meister's Corvex management announced it had Acquired 4.4% stake in Ladbrokes owner.
Corvex is a major investor in MGM Resorts International (NYSE: MGM ), where Meister serves on the company's board of directors. The casino giant is Entain’s 50/50 partner at BetMGM. Meister's firm joins Dendur Capital and Sached Heam Capital, two New York-based hedge funds that recently disclosed activist investor stakes in Coral's ownership. The two asset managers bought shares in Entain before Nygard-Andersen resigned.
We believe Entain is at a critical juncture and could benefit from the constructive engagement of a well-informed shareholder with deep industry and company-specific experience and expertise," Corvex said in a statement.
The hedge fund added that it intends to "be a useful force for change" in partnership with Entain chairman Barry Gibson and interim chief executive Stella David.
Corvex Entain investment could fuel MGM rumors
Entain's U.S.-listed shares were up nearly 9% in midday trading, a sign of investor excitement over Nygaard-Andersen's departure and Corvex's stake in the gaming company.
The news could also reignite speculation that MGM may revisit its bid for Entain. Corvex is an activist investor who is pushing for some form of change through investments in companies. Since Mester is an MGM director, he will almost certainly vote to support the Bellagio operator's renewed bid for its BetMGM affiliate.
After Entain rejected an $11.06 billion takeover bid from MGM in January 2021, there was strong speculation that the casino company would eventually reconsider the takeover proposal. However, company executives say such a deal won't happen in the near future. Entain investors may wish their company had accepted the deal, as the operator's market capitalization has fallen to $6.83 billion.
Corvex and other activists may pressure Entain to sell its BetMGM stake to MGM - which the latter might accept - but it's unclear whether this is their plan of attack as the company Hedge funds are also important investors in Sweden's Kindred Group.. However, he is unlikely to push for Entain to become a buyer of Kindred, given its recent acquisition missteps.
Performance "unacceptable"
Entain and Nygaard-Andersen were targeted by activists after the operator launched a $2 billion debt push to acquire smaller sports betting operators across Europe in what appeared to be a bid to gain scale and fend off unsolicited takeover bids.
These missteps, combined with BetMGM's decline in US market share and Entain's recent $729 million payment to UK regulators to settle bribery allegations related to its Tsh dealings, may have sealed Nygaard-Andersen's fate.
The former CEO hurt herself by failing to control company costs and the art of private air travel, drawing the ire of Entain investors, who dubbed her a "private jet." Corvex, for its part, sees further changes at the gaming company.
"While the company's recent leadership changes are a necessary first step, further changes are needed. Simply put, Entain's recent performance has been unacceptable and all options must be considered to add value," the asset manager concluded.
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Source: www.casino.org
