13th Dec 2023 10:13
(Alliance News) - Entain PLC on Wednesday said its chief executive will step down from the post, and shares in the Ladbrokes Coral owner leapt in response, suggesting investor patience in Jette Nygaard-Andersen was wearing thin.
The sports betting and gambling company, which also owns brands such as bwin, PartyPoker and Sportingbet, said Nygaard-Andersen will be replaced by Stella David, who will remain in the role until a permanent replacement is found.
Entain's stock shot up 4.4% to 840.79 pence each in London on Wednesday morning, eating into some of its roughly 40% share price over the past 12 months.
"Entain's share price has been under significant pressure year to date due to well-documented issues, including an acquisition strategy and resulting equity raise that was poorly received by some investors coupled with slowing organic growth in its online division. Recent market share losses in BetMGM and the delayed timeline of profitability caused further investor concern," analysts at Irish broker Davy commented.
"Certain investors had raised question marks about the CEO's performance in the media, so there was something of a sense of inevitability about the change."
The Financial Times reported on Wednesday that one "top 10 institutional investor" in Entain was happy to see the back of Nygaard-Andersen.
"After a difficult period, it is time for an executive leadership at Entain that can get us back to a truer reflection of the fair value of the business," the investor said, according to the FT.
Entain said Nygaard-Andersen's decision to leave comes after the company entered into a deferred prosecution agreement with the UK Crown Prosecution Service in relation to bribery offences at its former Turkish firm.
HM Revenue & Customs launched in investigation into Entain in 2019. Entain faced allegations relating to bribery offences at its former Turkish unit, sold by a management team in 2017.
Entain was alleged to have had inadequate procedures in place to prevent such activity, although it claims to have since "undertaken a comprehensive review of its anti-bribery policies and procedures and has taken decisive action to significantly strengthen its wider compliance programme and related controls."
Entain has agreed to pay a penalty plus disgorgement of profit totalling GBP585 million. Additionally, the company will make a charitable donation of GBP20 million and pay GBP10 million towards HMRC and CPS costs, all of which will be provided in four annual instalments from funds it had set aside to cover expected penalties stemming from the case.
Nygaard-Andersen has been CEO of Entain since the start of 2021, having joined the board of what was then GVC Holdings at the end of 2019.
In September, issued a discouraging trading update, cutting top-line guidance.
Entain bemoaned net gaming revenue has been weaker than expected, explained that unfavourable sporting results hurt margins and added that regulatory matters in the UK and elsewhere have been "headwinds".
"Post the summer, online net gaming revenue has been mixed across the group, but in aggregate, softer than anticipated," Entain explained.
It lowered its net gaming revenue outlook, predicting low double-digit growth, its guidance cut from a low- to mid-single-digit rise.
interactive investor analyst Richard Hunter commented: "She has also been battling against a struggling share price which is down almost 40% this year, making it a major underperformer on the FTSE 100, as well as pressure from activist shareholders, slowing revenue and regulatory headwinds. Although no reason was given for her departure, following the recent underperformance at Entain, ultimately the buck stops with the CEO."
There were whispers of a possible takeover by joint-venture partner MGM Resorts International when the year began, though the New York listing ruled out making an offer in February.
"The simple answer on Entain is no; we've moved on," MGM Chief Executive Bill Hornbuckle said at the time, before adding: "We value the relationship with Entain. We value BetMGM."
Entain's stock suffered a 14% slide on February 9 following the remarks, its worst session of the year.
By Eric Cunha, Alliance News news editor
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