Entain Draws Activist Action, New Investors Want Ricky Sandler on Board

The U.S.-listed shares of Entain Plc (OTC: GMVHY) rallied Wednesday following reports that activist investors recently built stakes in the Coral owner.

Dendur Capital and Sached Heam Capital, two New York-based hedge funds, amassed positions in the gaming company. They are believed to be pushing Entain to grant Eminence Capital founder Ricky Sandler a board seat. Sandler, whose hedge fund is one of the largest shareholders in the sportsbook operator, publicly criticized Entain management.

In June, he bashed the $750 million purchase of STS Holding, noting the issuance of new stock to fund the deal signaled Entain’s lack of understanding of basic finance, or naivety among investors.

Sandler’s firm has been an Entain investor for more than three years, and as of June, owned 2.1% of the Ladbrokes owner’s shares outstanding.

 Activists Could Push Nygaard-Andersen Out

Amid the flurry of activist activity among Entain investors, there’s speculation that the new shareholders could move to push CEO Jette Nygaard-Andersen out.

That disappointing outlook prompted concern among Entain investors that the operator is facing increasing regulatory headwinds in its home market of the UK. Investors also believe that it could draw unsolicited takeover bids from suitors attempting to capitalize on the operator’s depressed market capitalization.

Entain investors are also said to be worried about other internal matters at the company. For its part, the operator said it laid out “a clear plan” for organic expansion, and that Nygaard-Andersen landed 99% support among shareholders at the company’s annual meeting in April.

Where BetMGM Could Figure In

BetMGM, of which Entain owns 50%, wasn’t mentioned, and neither Dendur Capital, Eminence Capital, nor Sached Heam Capital commented to the FT. Still, it’s possible the U.S. online sportsbook and iGaming operator will figure into the equation at some point.

Selling its BetMGM interest would also serve the aim of reducing Entain’s capital commitments to the expensive U.S. market, while also potentially keeping would-be buyers at bay. That’s because BetMGM was widely viewed as the primary source of allure behind the 2021 acquisition offers made to Entain by MGM and DraftKings (NASDAQ: DKNG).