SBC News Gibson's departure sees PE Barons circle Entain assets

Gibson’s departure sees PE Barons circle Entain assets

The assets of Entain Plc are being closely circled by private equity giants, with a view to plunder the FTSE100 gambling group under its strategic review.

As reported by The Sunday Times, the ‘US private equity barons’ of Apollo Global and CVC Capital are considering a break-up of Entain as the business ends its era of ‘casino capitalism, following last week’s announcement of Barry Gibson’s imminent departure as Chairman.

The Times article principally retold Gibson’s tenure as Chairman, and his bold ambitions of securing a multi-billion-pound sale of Entain to MGM Resorts.

Riding high on a peak share price of £22 and empowered by 20 quarters of double-digit growth, in 2020 and 2021, Gibson rejected two consecutive approaches made by MGM, each above £7bn, to acquire Entain.

At the time, Gibson’s spurning of MGM’s overtures seemed inspired; however, fast-forward to today and “Entain is a shadow of its former self. A rout of the company’s shares has left them worth less than £8.”

Gibson departs Entain having settled a £600m fine with HMRC and the Crown Prosecution Service (CPS) to conclude the investigation into its former Turkish subsidiary operated by GVC Holdings.

The Times noted that Gibson’s tenure as chairman saw the company’s leadership team, led by former CEO Jette Nygaard-Andersen, prioritise growth within regulated markets, moving away from the high-risk ‘grey market’ strategy pursued by GVC Holdings.

As noted, “the duo spent more than £2bn on 11 acquisitions, from Eastern Europe to Canada, in the years that followed” – an M&A strategy that expanded Entain’s gambling portfolio to 35 brands.

Booking corporate losses of £900M, the board of Entain has established a Capital Allocation Committee (CAC) to evaluate the FTSE100 firm’s brand portfolio, corporate funding, and operating structures.

The board of Entain has hired ’boutique bank’ Moelis & Company to assist the CAC team in its evaluation of corporate assets, informing investors that ‘all brands are at a crossroads’ except for the ‘US growth child’ BetMGM.

Pressure mounts on the CAC team to price up assets, as PE vultures circle a bruised and bloodied FTSE firm which could trigger a fire sale of brands such as Coral, Sportingbet, Bwin, and Party Gaming.

Apollo and CVC Capital, the private equity firms in question, boast a distinguished history of fruitful investments in the gambling sector, having successfully restructured and then divested companies including Lottomatica, GameNet, Sky Bet, Sisal, and OddsChecker.

Addressing shareholders, Stella David, the Interim CEO at Entain, acknowledged the challenging situation as the company reassesses its brand make-up. Despite this, the executive team is optimistic that the company  assets on the market will fetch premium valuations.

The Times believes that Entain will name an incoming chief executive at ‘any time in the coming days and weeks’; however, it noted that staff morale was on the wane following the affairs of a traumatic year.

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