Entain Steadies Ship, but It’s Curtains for Crystalbet
Posted on: May 21, 2024, 08:36h.
Last updated on: May 21, 2024, 10:04h.
After a tumultuous two years that saw the value of Entain’s (OTC: GMVHF) shares tumble to a third of their September 2021 high, the online gambling group is well-positioned to deliver high-quality, long-term growth. That’s the takeaway from a strategic review by the Board’s Capital Allocation Committee (“CapCo”) of Entain’s portfolio of markets, brands, and verticals.

In a note to investors, the board said Entain now has an “appropriate portfolio of diversified strategic assets, brands, capabilities, and geographic footprint” to ensure it can deliver growth and value for shareholders.
However, the review concluded that Crystalbet, the leading gaming brand in Georgia, was a noncore asset and, therefore, surplus to requirements. As such, “strategic alternatives” would be considered for the brand, including “interest already received from potential acquirers.”
Angry Activists
The Entain board appointed the committee in January as it sought to placate activist investors. Activists have lately taken an increasingly prominent position in the group and were making noises about the company’s direction.
Rumored internal unrest led to the resignation last December of then-CEO Jette Nygaard-Andersen.
Eminence Capital founder Ricky Sandler, who now sits on the Entain board, was openly critical of Entain’s M&A strategy. He complained that the company’s practice of funding acquisitions with “highly undervalued equity” was “an empire-building, shareholder value-destroying strategy.”
In March, Entain announced it had hired advisory firm Moelis to oversee the potential sale of noncore brands. In addition to CrystalBet, these included Netherlands-based BetCity, Sweden-based Enlabs, and Ladbrokes Australia. PartyPoker is also understood to be up for sale. These assets weren’t mentioned in Tuesday’s note.
‘Winning in the US’
The review concluded there was “significant upside” by focusing on delivering Entain’s strategy of “returning to organic revenue growth, expanding margins, and winning in the US.” It noted the company’s balance sheet and leverage position was now robust.
Further reasons to be cheerful, according to the report, include a strong performance in Brazil, the expectation of a return to growth in the UK later this year, regulatory approval in Nevada, and progress in the delivery of the product roadmap for BetMGM.
“I am delighted that the Capital Allocation Committee has concluded its strategic review of our portfolio,” said Barry Gibson, Entain chairman, in a statement. “Whilst we still have more work to do to improve our operational performance, the Board is pleased with the progress Entain is making so far in 2024 in line with our strategy. The Group has the core strengths, brands, and products to be competitive across its markets and continues to be a global leader in betting and gaming.”
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