Entain Faces Activist Pressure as Corvex Management Calls for Change

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.