25th Jul 2023 13:54
(Alliance News) - On Tuesday 888 Holdings PLC shares were up, as investors hope that naming Per Widerstrom as its new chief executive officer has closed a "difficult" chapter for the betting firm.
With Widerstrom appointed, ending its roughly six-month search for a new boss, 888 looks to re-emerge from a tricky period.
"It has been a difficult year for 888 with a record fine for William Hill, an investigation into its Middle East operations and the departure of its CEO. Wilderstrom's appointment could open up a new, more positive chapter for the group," said interactive investor's Victoria Scholar.
"Reflecting this, shares in 888 are trading sharply higher today, extending the stock's 2023 rebound. However 888 remains lower over the past 12 months, sharply underperforming rival Flutter Entertainment."
888 shares were 4.4% higher at 109.88 pence each in London on Tuesday afternoon. The stock is up 25% so far this year, but over the last 12 months the stock is down 27%
Flutter Entertainment shares were down 2.6% Tuesday, but have surged 85% over the last 12 months and are up 30% in the year-to-date.
888 said that Widerstrom was most recently CEO of Fortuna Entertainment Group, a betting and gaming firm in central and eastern Europe. Widerstrom joins as 888 CEO from October 16.
He was formerly managing director of Gala Interactive, a casino group now owned by Entain PLC, and was once chief operating officer of PartyGaming PLC, which later merged with bwin Interactive Entertainment AG to form Bwin.Party Digital Entertainment PLC. The latter is now also part of London-listed Entain.
"We are delighted to be able to appoint Per following what has been an extensive and comprehensive search process. The board unanimously agreed that Per was the clear standout candidate to lead the group to build on the strong platform for growth and value creation that has been established," Chair Jonathan Mendelsohn said.
"Per not only understands the power and exciting potential of the business, but the board is also very pleased with his strong record and reputation on governance and compliance."
Mendelsohn, currently executive chair, will return to a non-executive role upon Widerstrom's appointment.
Mendelsohn took over as executive chair on an interim basis at the end of January, after former 888 CEO Itai Pazner stepped down immediately. Pazner departed at the same time 888 reported it had suspended some activities in the Middle East amid a customer compliance probe.
Following an initial review, 888 said some of its units in the Middle East region fell short in know your client and anti-money laundering compliance measures. 888 at the time said it currently believed the issues were "isolated to this region only".
In March, it was announced that three gambling businesses owned by 888's William Hill were to pay a total of GBP19.2 million for "widespread and alarming" social responsibility and anti-money laundering failures.
It was the largest settlement in UK Gambling Commission's history.
888's "troubled" year continued on Friday last week, with the company losing over 25%.
On Friday, 888 said the UK gambling watchdog was reviewing its licence, after a vehicle backed by former executives of GVC Holdings, now known as Entain, proposed additions to the bookmaker's board.
888 said FS Gaming, which last month built a 6.6% stake in the gambling firm, is backed by Kenny Alexander, Lee Feldman and Shay Segev. Alexander was formerly chief executive of GVC Holdings. Alexander was replaced by Segev, who then stepped down as chief executive in January 2021 to head up sports streaming platform DAZN.
FS proposed adding Feldman, Alexander and Stephen Morana as 888 chair, chief executive and chief financial officer. Morana previously held that post at Betfair.
ii's Scholar said: "Talks with the trio have now ended. The appointment of Per Wilderstrom hopefully marks the end of the uncertainty around 888's licence to operate in the UK, something the company will have no desire to jeopardise."
Entain back in May said it entered into deferred prosecution agreement negotiations with the UK Crown Prosecution Service in relation to a HMRC probe. It centred on the conduct of former employees and surrounded its former Turkish unit.
888 explained: "Entain noted that the ongoing investigation includes a review of its former Turkish facing business and that the company acknowledged that historical misconduct involving former third party suppliers and former employees may have occurred. In considering the proposal, the board examined all potential risks related to this, including reviewing information from historic discussions between William Hill and GVC.
888 said it had been in contact with the Gambling Commission in relation to FS Gaming's recent investment, as well as its proposal to add to the firm's board.
"The Gambling Commission has expressed its concern regarding the ongoing HMRC investigation into GVC's activities covering the time the individuals proposed to the board by FS Gaming were in senior leadership positions at GVC, and that it is in close dialogue with HMRC regarding its ongoing investigation. The Gambling Commission requested regular updates from 888 in relation to any new developments in the circumstances around FS Gaming and its proposal so that it can fully execute its responsibilities as the GB regulator," 888 added.
888 said it went to FS Gaming for clarification but said this was not forthcoming. It also said that the Gambling Commission informed the firm that it needs to begin a review of its operating licences. This was in light of FS Gaming's investment and proposed board additions.
888 added: "The group will co-operate fully with the Gambling Commission in its licence review. The Gambling Commission has confirmed that a licence review allows for a range of outcomes, including immediate suspension, revocation of operating licences, or the imposition of licence conditions or financial penalties if the commission finds that licence conditions have been breached, or that the operator, or relevant persons connected to the operator, are unsuitable.
"As a result of the initiation of the licence review by the GBGC, and in conjunction with publicly available information, and the board's due diligence, the board concluded that the appointments proposed by FS Gaming have no reasonable prospect of being approved by the Gambling Commission at this time and any actions by FS Gaming to effect a change of corporate control would likely put the group's licences to operate in the UK at immediate and significant risk. Therefore, the board has unanimously concluded to terminate discussions."
Peel Hunt's Ivor Jones noted that FS Gaming "has yet to comment and may be prevented from taking any action until the UK Gambling Commission completes its licence review."
Peel Hunt kept its 'buy' rating for 888 unchanged, with a target price of 150.0 pence.
By Sophie Rose, Alliance News reporter
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