It’s been impossible to escape news about Entain over the past few months, and rarely has it been positive, unfortunately. This trajectory led to a major development when Jette Nygaard-Andersen, Entain’s CEO for the past few years, announced her resignation with immediate effect earlier today.
There is no doubt this could have quite significant knock-on effects for the industry. Indeed, Entain has been left in a delicate position without a permanent CEO (Stella David has succeeded Nygaard-Andersen as Interim CEO) while also recovering from record fines.
With Entain’s share price at its lowest point since August 2020 earlier this month, sitting at £8.00 ($10.11) when compared to £22.10 in September 2021, there were probably already sharks circling and evaluating Entain as a potential M&A target.
This is all the more important when you realise that DraftKings attempted to buy Entain all the way back in October 2021 for £16.2bn. The American company had initially made a £25-per-share proposal, but had to raise this to £28-per-share, only to still get rejected and walk away from the deal.
“The resolution of the HMRC investigation into the legacy business, which was sold by a former management team in 2017, offers a clean inflection point for me and for Entain” - Jette Nygaard-Andersen
Just look at the difference now, however. Entertain’s share price bounced 5% after Nygaard-Andersen’s resignation but Entain’s stock is still currently valued at below £8.40.
DraftKings wasn’t the only company from across the pond which had its eyes on Entai, either; MGM Resorts had attempted an £8.1bn takeover this January. This makes sense; after all, MGM and Entain are business partners and joint operators for the digital brand BetMGM.
Once the DraftKings attempt went public, MGM confirmed it would have taken over BetMGM if DraftKings had signed the deal to acquire Entain.
The question is: does anyone now consider Entain a viable proposition considering its newfound vulnerability?
Entain owns a number of attractive brands, like Ladbrokes, Coral, bwin, partypoker, Foxy Bingo, STS and other global organisations; so it’s got its metaphorical finger in a lot of metaphorical pies, something other operators may find appealing in a purchase - plus it is a purchase that is considerably cheaper now than it ever would have been in the past.
Of course, it’s unfair on Nygaard-Andersen to point the finger at her for all of this. During her three-year tenure, she certainly had to navigate some heavy historical failings from before her time.
Perhaps the most damning of these was the £585m bribery financial penalty that Entain had to pay HMRC this winter. The official statement from the company was released on 5 December, after several months of tension and speculation.
"Entain has now fundamentally and profoundly changed. We can now concentrate on the future" - Barry Gibson, Entain Chairman
Barry Gibson, Entain's Chairman, said: "This is the final step in a process that has hung over our business since HMRC launched its investigation into a business that was sold by a former management team six years ago.
"We have co-operated extensively and proactively at every stage of the process which, I am pleased to say, has been recognised by the Court.
Of course, we know now that the future of the company would see it without a CEO within eight days. This was after mounting pressure from activists from inside and outside of the company, who had stated that they’d grown dissatisfied with Nygaard-Andersen’s leadership.
So, what were they complaining about? She was the first female CEO who had driven up share prices by 95% during her first year in operations, reaching a record high of £22.10 in September 2021.
Well, a major point of contention was not only the amount of mergers and acquisitions that the company went on to complete under Nygaard-Andersen, but also the quality of them. Entain had acquired a staggering 11 companies totalling over £2bn during her tenure.
March 2021 - Entertainment Technologies £51.m
August 2021 - Unikrn £50m
December 2021 - Klondaika
February 2022 - Avid Intl £174m
March 2022 - Totolotek
June 2022 - BetCity £729m
August 2022 - SuperSport £581m
March 2023 - Tiidal Gaming NZ £8m
April 2023 - 365scores £120m
June 2023 - STS £717m
July 2023 - Angstrom Sports £122m
While some of these seemed optimistic at best, others certainly raised eyebrows. One of these was Unikrn, an esports betting and entertainment company, which was shut earlier this year. Entain announced that it would be stopping the B2C operations of the brand, with the website closing on 20 October.
The closure was a shock to many, considering that Unikrn was one of the longest-running esports betting companies, dating back all the way to 2014.
While the specifics weren’t publicly announced, rumours from Unikrn employees pointed towards years of mismanagement from Entain, or more specifically, the people Entain hired to run Unikrn after it was acquired.
Just as history repeats itself, Entain also acquired BetCity in September 2022, despite knowing about its legal troubles with the KSA, the Dutch Gambling Authority. While the €3m ($3.2m) fine wasn’t the largest amount in the world, especially for a company like Entain, the compliance failures in anti-money laundering (AML) and counter-terrorism financing (CFT) practices certainly weren’t a good look.
This wasn’t the only business move from Entain that seemed questionable. On 16 June 2023, Eminence Capital would publish an open letter voicing its displeasure at the £717m acquisition of STS. The investment firm, which had 2% of all Entain shares, said that the deal was ‘tone deaf’ and stated ‘the management either doesn’t understand finance or, worse, that they believe the company’s shareholders are naïve’.
"We remain confident in our ability to deliver on the significant growth opportunities that are ahead of us” - Entain
Despite this, Entain kept its head held high amongst rising pressure.
When Gambling Insider reached out for comment, a statement from the company said: “We constantly engage with all of our shareholders, and are committed to constructively addressing any questions or concerns that they may have.
"The executive team recently laid out a clear plan, with the full support of the Board, to accelerate the actions that we are taking to drive sustainable organic growth, expand our margins, strengthen the team, capitalise on the US opportunity, and deliver long-term value for our shareholders.
So only time will tell what ‘growth opportunities’ lay in store for Entain, and whether the industry giant will finally succumb to purchasing pressure from the US.
The more interesting question, though, is whether Entain could find itself being the one acquired now; with three years of spending, low share prices and dozens of brands under its belt, its best route out of its current position could well be finding another suitor. If, that is, interest remains...
