These are busy times at Entain. The gambling group behind Ladbrokes and Sportingbet is searching for a new chief executive plus a couple of additional non-executive directors (one of which is likely to be named imminently) and has begun a review of its markets, brands and products.
Its review is being conducted by a recently formed “capital allocation committee”, set up to “help to focus the organisation, improve competitive positions in core markets and maximise shareholder value”. In short, the company is doing a spot of weeding out of non-core businesses.
Nobody at Entain will say what is being weeded out, but most of the chatter points to a sale of a bunch of businesses that, through geography, type of gambling or brand, no longer fit the company’s business model. Last weekend, Earnings+More, an industry publication, reported that Entain was seeking buyers for its PartyPoker business and possibly brands including Foxy, Eurobet, Enlabs and even Coral.
The article did not name a price but did suggest that, with a relatively small number of logical buyers, it was unlikely to fetch a knockout sum. It estimated revenue for PartyPoker to be between £75 million and £100 million, or 2 per cent to 3 per cent of online revenue. Assuming a 30 per cent pre-tax margin and a multiple of five to eight times, this would give a value range of something like £112 million to £240 million.
There was even speculation that, as a result of the scattergun M&A strategy employed by Entain under Jette Nygaard-Andersen, its recently disgarded chief executive, some of the businesses she had acquired during her sub-three-year stint at the helm could be chucked back in the “for sale” box. That may be the case, though last night sources close to the company were furiously playing down the suggestion that its central and eastern Europe region, notably Croatia, would be one such casualty, insisting that it was performing very strongly.
Given what happened to Nygaard-Andersen (she was shown her cards in December amid growing antipathy from activist shareholders), the odds must be on an experienced gambling executive being handed the gig at Entain. Among those tipped are Andreas Meinrad, the chief executive of BVGroup, and Rob Wood, Entain’s own chief financial officer, as well as Richard Flint, the former Sky Bet chief executive.
Another name mentioned has been Adam Greenblatt, the boss of BetMGM, the American joint venture between Entain and MGM Resorts International. Greenblatt seems to be regarded as an outsider for the Entain job, but some are tipping him to stay where he is in the hope that MGM revives its acquisitive intentions towards Entain, which it put on ice back in 2021. Analysts suggest that a slimmed-down version of Entain could be more attractive to MGM.
In the meantime, Entain is being run very ably by one of its non-executive directors. Nobody would be surprised if Stella David, a former chief executive of William Grant & Sons, the Scotch whisky group, was asked if she would be interested in throwing her hat into the ring and there is little doubt she is enjoying being interim chief executive. However, the signs are she doesn’t want the job on a permanent basis, so shareholders will have to make the most of her while they’ve got her.
It looks like David has been spending much of her time clearing up the mess left by the past two chief executives: while Nygaard-Andersen was deemed too soft, Kenny Alexander was a bit too gung-ho for some shareholders and left the business saddled with a deferred prosecution agreement with HM Revenue & Customs that cost Entain a penalty of £615 million for alleged bribery in its Turkish business, which has since been sold.
Advice Buy
Why? The appointment of a veteran chief executive from inside the industry should provide a boost
Oxford Biomedica
As part of Oxford Biomedica’s shift to become a “pure play” contract development and manufacturing organisation in the cell and gene therapy market, it has streamlined its board (Alex Ralph writes).
The appointment of Peter Soelkner, the managing director of Vetter Pharma, as a non-executive director (he will join from the end of the week) and the departures of Catherine Moukheibir and Michael Hayden, who will stand down at June’s annual general meeting, are designed to bolster Oxford Biomedica’s boardroom expertise.
The strategy, which includes ending the company’s hybrid business model and therefore leaving its residual product development business, is being led by Frank Mathias, who became chief executive last March. At the company’s half-year results in September, Mathias, 61, moved to reset the business. He rebased the finances, cut forecasts for 2023, outlined medium-term growth predictions, renewed a cost-cutting drive and announced plans to expand the business in the European Union through the acquisition of ABL Europe from Institut Mérieux in France for €15 million. All of which is designed to revive a company, spun out of the University of Oxford, whose balance sheet and share price were temporarily lifted during the Covid-19 pandemic by its success manufacturing the AstraZeneca-Oxford vaccine.
Mathias is seeking to rebuild investors’ confidence after downgrades to forecasts and amid scepticism from some in the City about excess capacity in the market and limited commercial traction for most gene therapies. Underlining the challenge, shares in Oxford Biomedica have halved since Mathias took charge.
An encouraging full-year trading update last Tuesday, including for this year and its medium-term outlook, provided some relief, paring losses in the stock. The value of client orders signed during the year rose by 50 per cent to £131 million year-on-year, excluding Covid vaccine manufacturing, and the company said it expected operating profit margins of more than 20 per cent by the end of 2026 and to be profitable in 2025.
Advice Hold
Why In early stages of a long-term shift towards becoming a specialist CDMO
