Entain Faces Investor Revolt as US Activist Hedge Funds Join Criticism
With two more US activist hedge funds, Dendur Capital and Sachem Head Capital Management, joining Eminence Capital in voicing concerns about the business’s share price and CEO leadership, Entain, the parent company of Ladbrokes and Coral, is coming under more pressure.
The UK gambling powerhouse has seen covert acquisitions by hedge funds Dendur Capital and Sachem Head Capital Management of New York, which has increased investor angst. According to the Financial Times, Entain’s share price has plummeted by more than a third this year, hitting a three-year low, but its rival Flutter’s share price has increased by 11%.
Activist investors attribute their concerns to a number of failures, including as management errors and a regulatory crackdown on internet betting in the UK. An important turning point was this summer’s stock raising, which hurt Entain’s share price while financing the purchase of Polish gaming business STS Holding.
CEO Leadership Under Scrutiny
The focus is squarely on CEO Jette Nygaard-Andersen, who took over the position in January 2021 despite having little prior expertise in the gaming industry. Her leadership is criticized by activists, who charge that the company’s problems are the result of “a lot of self-inflicted wounds.” Entain issued a warning in September about a possible “low single-digit percent” fall in pro forma online gaming sales for the year, despite the company having seen double-digit increase in online revenues for 23 straight quarters.
Entain promised to add four additional non-executive directors to its board in response to the activist pressure. But activists—led by Ricky Sandler, the founder of Eminence—are pressing for his appointment to the board and his assistance in filling other open posts.ntain’s stock value.
Entain places a strong emphasis on its dedication to attending to shareholder concerns, providing a strategic plan for organic company growth, enhanced profitability, and capturing market share in the expanding US gambling industry.
In order to prevent upsetting discussions about a possible £585 million ($732.2 million) settlement with UK authorities involving historical bribery accusations, Chair Barry Gibson asks investors to remain patient. It is anticipated that this settlement will be completed within the next month.
Hedge funds Perbak Capital Partners and Ilex Capital Partners, both located in London, have taken significant short positions on Entain, which has increased scrutiny of the company’s prospects going forward. This has added to the issues.
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Source: igaming
