Entain Plc (OTC: GMVHF) Could be Eyeing Dramatic Action Amid Executive Departure and Stock Surge
Following the departure of CEO Jette Nygaard-Andersen and increased activity in the stock by activist investors, Jefferies analyst James Wheatcroft believes it could be an opportune time for Entain Plc (OTC: GMVHF) to consider dramatic actions. In a recent report to clients, Wheatcroft upgraded the rating of the Ladbrokes parent’s downtrodden shares from “hold” to “buy,” suggesting that a variety of options could be on the table for the gaming company.
One such option could be the sale of Entain to MGM Resorts International (NYSE: MGM), sale of the BetMGM stake, sale of other assets, or finding a suitable CEO. Wheatcroft implied that several factors now suggest an opportune moment for MGM to reconsider an approach to Entain.
Talk of MGM Resorts International bidding anew for its BetMGM partner comes nearly three years after the company bid $11.06 billion in cash and stock for Entain. The British bookmaker rejected the offer, and since then, MGM has not publicly floated another bid, and the market capitalization of Entain has slumped to $7.89 billion.
Wheatcroft is bullish on Entain despite the specter of transformative transactions hindering the search for a new CEO. He sees short odds for a highly credible CEO to land at Entain, especially with expected upcoming appointments to the gaming company’s board of directors, including Ricky Sandler from Eminence Capital and Keith Meister from Corvex Management.
Sandler’s addition to the board and Meister’s 4.4% stake in Entain could be catalysts for deal-making. However, while Meister isn’t a candidate for an Entain board seat due to potential conflicts of interest, his position at MGM and ownership of its shares outstanding suggests he could come out ahead if MGM buys Entain outright or acquires full control of BetMGM.
Despite executive upheaval and increased interest in Entain by activist investors, MGM executives have been steadfast in their stance that another outright takeover bid for Entain isn’t likely in the near term. Nevertheless, Wheatcroft believes Entain’s shares are currently inexpensive, even when accounting for the recent headlines indicating the company could be a takeover target.