Private equity firms including Apollo, CVC and others are reportedly interested in the Entain brand
Entain's (OTC: GMVHF ) American depositary receipts (ADRs) rose 9% today on reports that private equity firms may consider bidding for some of the gaming company's brands.
An article in British newspaper The Times identified Apollo Global Management (NYSE: APO) and CVC Capital as among the private equity firms considering a bid for Entain's various gaming brands. With the recent news that CEO Barry Gibson will leave the gaming company by the end of September, the possibility of Ladbrokes looking to sell assets is said to have increased.
Last month, Entain hired financial advisory firm Moelis to assist with the potential disposal of BetCity, Enlabs, Ladbrokes Australia and Georgia-based CrystalBet as it refocuses on its core business.
Activist investors including Eminence Capital founder Ricky Sandler have been pushing for changes at Entain following a series of missteps. Some criticized former CEO Jette Nygaard-Andersen for a string of acquisitions. Sandler recently joined the gaming operator's board of directors.
Apollo and CVC were the actual bidders for Entain Assets
If Entain were to undertake a major asset sale, Apollo and CVC are logical candidates. CVC Capital is the former owner of Sky Bet and holds a majority stake in German sports betting giant Tipico.
Likewise, Apollo, which operates the Venetian hotel on the Las Vegas Strip, has been frequently linked to rumors of gaming consolidation. In 2021, the private equity firm was one of the financial firms driving William Hill's international business, which was eventually sold to 888.
New York-based Apollo also owns a Canadian casino operator and an Italian sportsbook and has a long track record of investing in gaming.
It's unclear which Entain brands private equity bidders might be interested in. The operator's brands include Bwin, Coral, Ladbrokes, Partypoker, PartyCasino, SportingBet and SuperSport. SportingBet is likely to attract interest given its presence in South America and the upcoming liberalization of Brazil's online gambling market, but it is unclear whether the unit can enter the auction market.
BetMGM’s Equation
Entian owns 50% of BetMGM, a jewel in its portfolio, and it remains to be seen how the company will fit into a potential widespread asset sale. Nygard-Andersen said before his departure that the joint venture would not last forever and that Entain activists should push for the company to divest its BetMGM stake, a process that could attract a host of interested parties.
This group almost certainly includes MGM Resorts International (NYSE: MGM ), which owns the other half of the gaming brands and has often said it wants to control everything. MGM executives said they had no interest in resuming takeover talks for Entain after an $11.06 billion takeover bid was rejected in January 2021.
In December, Keith Meister's Corvex management acquired a 4.4% ownership stake in Entain, fueling speculation that MGM may eventually offer to acquire the 50% of BetMGM it does not own of shares. He is also a board member of MGM and an investor in the company.
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Source: www.casino.org
