Entain Seen Adding Ricky Sandler to Board, May Push for BetMGM Sale

Posted on: December 17, 2023, 07:00h. 

Last updated on: December 18, 2023, 03:25h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Entain Plc (OTC: GMVHF) is reportedly considering adding Eminence Capital founder Ricky Sandler to its board of directors. The move could potentially open the door to a full or partial sale of the operator’s 50% interest in BetMGM.

Sandler Entain
Eminence Capital CEO and CIO Ricky Sandler. Entain could add him to the board of directors. (Image: Institutional Investor)

Citing unidentified sources with knowledge of the matter, The Sunday Times reported that Entain could add Sandler to its board before the end of this month. The rumor surfaced less than a week after the Coral owner announced the immediate resignation of CEO Jette Nygaard-Andersen, an executive of whom Sandler was openly critical.

He bashed the $750 million purchase of STS Holding in June,?noting the issuance of new stock to fund the deal signaled Entain’s lack of understanding of basic finance or naivety among investors. As of the end of the second quarter, Eminence Capital owned 2.1% of Entain’s freely floating shares.

Assuming Entain does appoint Sandler to the board, it could be viewed as a move to appease activist investors Dendur Capital and Sached Heam Capital. Those two hedge funds recently took stakes in the gaming company, noting they wanted Sandler appointed to the board, adding that Entain should include him in filling other board vacancies.

Interesting Timing for Entain

In addition to speculation of Sandler joining Entain’s board on the heels of Jette Nygaard-Andersen’s resignation, the rumor appeared just three days after Keith Meister’s Corvex Management announced it took a 4.4% stake in the gaming company.

That’s potentially noteworthy because Corvex is a significant investor in MGM Resorts International (NYSE: MGM), Entain’s 50/50 partner in BetMGM. Additionally, Meister is a member of the casino operator’s board.

Previously, Sandler floated the idea of Entain selling all or part of its BetMGM stake to raise capital and renew its focus on markets in which it’s firmly established, including Australia, Europe and the UK. MGM has made no secret of its desire to control all of BetMGM, and it would likely be open to negotiating a buyout of Entain, which would be more cost effective than purchasing the Ladbrokes owner outright.

According to The Sunday Times, Entain will not appoint Meister to its board because of his membership on the BetMGM and MGM boards.

Could Be Good Time for Entain to Mull BetMGM Sale

It remains to be seen if Sandler gains an Entain board seat and what change he and his fellow activist investors augur for. But a case can be made that now is an opportune time for the gaming company to consider divesting some or all of its BetMGM position.

The internet casino and online sportsbook operator is increasingly profitable, targeting?$500 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2026.

Conversely, BetMGM is nearing self-funding status, meaning Entain wouldn’t be on the hook for more capital contributions to the online gaming entity. That could make it attractive for Entain to retain its interest in the business unless a potential MGM offer for that stake is highly compelling.