Activist hedge fund Corvex Management has recently made a move to acquire a 4.4% stake in Entain, a gambling giant, and is now calling for further changes within the company. This purchase of around 28 million shares by US-based Corvex came just as news broke of CEO Jette Nygaard-Andersen’s resignation from her role at Entain.
Corvex views the management change as a “necessary” first step, but believes that more changes are imperative due to what it perceives as “unacceptable” recent performance by Entain. The company stated its intention to engage with chairman Barry Gibson and interim CEO Stella David in order to drive value and be a positive force for change.
Nygaard-Andersen’s resignation was announced on December 13th, and David has taken on the interim CEO role while Entain seeks a permanent replacement. Nygaard-Andersen had been in the role since January 2021 and her departure followed the settlement of a long-running case with the Crown Prosecution Service (CPS) over historic activities in Turkey.
Despite the resolution of the Turkish case, Entain’s future remains uncertain, especially after investment bank and financial services giant Goldman Sachs downgraded the company to “sell” from “buy”. Goldman Sachs raised concerns over business growth, particularly within Entain’s online division and forecasted negative growth into 2024.
The company’s Q3 update also showed that online net gaming revenue growth had slowed to single figures, while its joint venture with MGM Resorts, BetMGM, remained at an 18% market share in US states. The future of BetMGM in the UK is uncertain as well, given that MGM Resorts is now working with LeoVegas, instead of Entain, after LeoVegas’ acquisition by MGM Resorts last year.
Prior to her resignation, Nygaard-Andersen had faced criticism for slow revenue growth and increasing regulatory obligations within Entain. Despite some major M&A deals during her tenure, including the acquisition of Polish sportsbook operator STS Holding and Angstrom Sports, her leadership was met with skepticism from both internal and external entities.
In conclusion, Entain’s recent performance and leadership changes have raised concerns among investors and shareholders, prompting Corvex Management to call for further changes. With a new interim CEO in place and ongoing uncertainties regarding the company’s future, the path forward for Entain remains unclear.