Apollo, CVC Among PE Firms with Reported Interest in Entain Brands

The American depositary receipts (ADRs) of Entain (OTC: GMVHF) surged 9% today amid reports that private equity firms could be eying runs at some of the gaming company’s brands.

A Ladbrokes betting shop in the UK. Operator Entain could see bids from private equity firms if it decides to sell assets. (Image: Yahoo Finance)

An article in the British newspaper The Times indicated Apollo Global Management (NYSE: APO) and CVC Capital are among the private equity shops that could consider making offers for Entain’s various gaming brands. The possibility of the Ladbrokes considering asset sales is said to be heightened amid recent news that Chairman Barry Gibson will depart the gaming company before the end of September.

Last month, Entain hired financial advisory firm Moelis to assist with the potential divestments of BetCity, Enlabs, Ladbrokes Australia, and Georgia-based CrystalBet in an effort to refocus on its core operations.

Activist investors, including Eminence Capital founder Ricky Sandler, have pushed for change at Entain following a series of missteps at the company. Some have criticized a series of acquisitions executed by former CEO Jette Nygaard-Andersen. Sandler recently joined the gaming operator’s board of directors.

Apollo, CVC Are Practical Bidders for Entain Assets

Should Entain engage in an extensive asset sale, Apollo and CVC make for logical suitors.  CVC Capital is the former owner of Sky Bet  and holds a majority stake in German sportsbook giant Tipico.

Likewise, Apollo, which runs the Venetian on the Las Vegas Strip, is often tied to various gaming industry consolidation rumors. In 2021, the private equity firm was among the financial companies that made runs at William Hill’s international operations, which were ultimately sold to 888.

New York-based Apollo also owns a Canadian casino operator and an Italian sportsbook company and has lengthy track record of investments in the gaming space.

It’s not yet clear which Entain brands private equity bidders might be interested in. The operator’s brands include Bwin, Coral, Ladbrokes, Partypoker, PartyCasino, SportingBet, and SuperSport, among others. Due its footprint in South America and the upcoming liberalization of Brazil’s online betting market, SportingBet could lure suitors, but it’s not clear if that unit could be on the auction block.

Where BetMGM Figures Into Equation

Entian’s 50% stake in BetMGM is one of the crown jewels in its portfolio and how that business figures into a potential broad-based asset sale remains to be seen. Prior to her departure, Nygaard-Andersen said joint ventures don’t last forever and should Entain activists push the company to divest its BetMGM stake, that process would likely lure numerous suitors.

That group would almost certainly include MGM Resorts International (NYSE: MGM),which owns the other half of the betting brand and has frequently said it would like to control all of it. MGM executives have said they are not interested in rekindling takeover talks for Entain following the rejection of a $11.06 billion bid in January 2021.

Stirring speculation that MGM could eventually make an offer for the 50% of BetMGM it doesn’t own, Keith Meister’s Corvex Management took a 4.4% stake in Entain last December. He’s also a member of MGM’s board and an investor in that company.

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