New York-based hedge fund, Corvex Management, has announced its entry into the ongoing drama surrounding FTSE 100 gambling giant, Entain, as it has acquired a significant 4.4% stake in the Ladbrokes owner. 

Corvex Spearheads Activist Onslaught, Deeming Current State ‘Unacceptable’

Corvex, led by former Carl Icahn lieutenant Keith Meister, has become the latest activist investor to assert itself in Entain’s affairs, labeling the current state of the company’s performance as “unacceptable.” The hedge fund emphasizes the need for a more radical overhaul, asserting that the recent management change is merely a preliminary step.

The announcement from Corvex came less than 24 hours after Nygaard-Andersen resigned, adding to the tumult surrounding Entain. The Ladbrokes owner has been grappling with a slump in its share price throughout the year, coupled with a series of unsuccessful acquisitions totaling over £2 billion ($2.6 billion).

Entain‘s joint venture with MGM Resorts International in the United States, particularly in the rapidly growing sports betting market, has been a focal point for the activist hedge fund. Corvex, already holding a stake in MGM where Meister sits on the board, aims to wield its influence to drive transformative change at Entain.

The hedge fund has expressed its intention to engage with Entain’s chairman, Barry Gibson, and interim CEO, Stella David, to actively contribute to positive changes within the organization.

Entain’s Shares Rally 7% Amidst Activist Calls for Industry-Expert Leadership

Entain’s shares experienced a nearly 7% surge, reaching slightly above £9 ($11.5) in morning trading following Corvex’s announcement. The gambling group now finds itself at a “critical juncture,” according to Corvex, suggesting that a shareholder with substantial industry and company-specific experience is necessary for the company’s revival.

Last month, Entain faced increased pressure as two US activist hedge funds, Dendur Capital and Sachem Head Capital Management, joined Eminence Capital in expressing concerns over the company’s stagnant share price and CEO Jette Nygaard-Andersen’s leadership. 

The activists cited regulatory challenges and management missteps, prompting Entain to pledge the appointment of four new non-executive directors. Activists, led by Ricky Sandler, also pushed for more inclusion on the board. Entain, in response to the increasing activist pressure, asserts its commitment to addressing shareholder concerns. The company remains confident in its ability to capitalize on significant growth opportunities, but the looming question remains whether the board will succumb to external pressures and consider a sale of the company or some of its assets.

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Activist investor HG Vora Capital Management has announced its stake in the gambling group 888, following the recent disclosure by a group of former executives from rival bookmaker GVC, currently rebranded as Entain. Financial Times reported that the New York-based fund revealed that it holds a 5.5% stake in 888, with shares owned directly by the fund and its head, Parag Vora. 

Consortium of Former Entain Executives Sparks Potential Shake-Up of 888

The emergence of both HG Vora and FS Gaming Investments, the consortium of former Entain executives, has set the stage for a potential shake-up of 888. The company’s stock price has struggled over the past year due to compliance issues and rising interest rates, which negatively impacted its £1.95 billion ($2.5 billion) debt-fueled deal to acquire William Hill.

Earlier this year, 888’s CEO, Itai Pazner, was dismissed when the board announced that £50 million ($63.3 million) of customer accounts had been frozen due to anti-money laundering failures. The accounts have since been reinstated. With the company currently being led on an interim basis by Chairman Lord Jon Mendelsohn, 888 is actively searching for a new CEO. 

FS Gaming Investments is not only advocating for a board seat but has also suggested that Kenny Alexander and Stephen Morana, both former Entain executives, could potentially lead the company.

HG Vora Capital Management supports the efforts to bring in a new management team at 888, with Alexander as the potential leader. 

HG Vora Capital Management’s Gambling Industry Investments

HG Vora Capital Management has a history of involvement in the gambling industry, having previously invested in US operators Penn National Gaming and Pinnacle Entertainment before their merger in 2018. It also disclosed a 5% stake in William Hill shortly before its acquisition by Caesars Entertainment in 2020.

At the same time, insiders suggest that FS Gaming Investments’ main focus is on achieving a faster integration between 888 and William Hill to reduce costs and address the group’s £1.6 billion ($2 billion) debt. The consortium includes Lee Feldman, the former chair of GVC, investment bank B Riley Financial, and its investment chief Daniel Shribman. GVC acquired Ladbrokes in 2017 and has since rebranded as Entain.

Despite the challenges faced by 888, the company’s board remains confident in its long-term strategy to create value for shareholders. The company is committed to updating and engaging with all shareholders as it continues to focus on its strategic and operational priorities.

Just this week 888 Holdings completed the sale of its Latvian assets to Paf for €28.3 million ($30.6 million), allowing 888 to streamline operations and concentrate on strategic growth while Paf expands its presence in the Latvian market and solidifies its position in the region.

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