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Entain is contemplating the sale of several non-integrated brands and has enlisted Wall Street boutique advisory Moelis to explore the potential divestment, the Financial Times has reported. 

According to sources familiar with the matter, these brands, some of them acquired during former CEO Jette Nygaard-Andersen’s tenure, are not part of Entain’s main technology platform, making them easier to sell.

Among the brands under review are reportedly Netherlands-based BetCity, purchased for €850m in June 2022 last year, as well as a local arm of Ladbrokes in Australia, Sweden-based Enlabs, and Georgia-based CrystalBet.

The potential sale of these assets would enable Entain to concentrate on bolstering its presence in key markets like the UK and Germany, where it has been grappling with declining market share, the FT wrote.

Moreover, it would free up resources to invest in BetMGM, the company’s joint venture with MGM Resorts International, which is experiencing rapid growth in the lucrative US market.

The move to divest non-core assets aligns with efforts by activist investors to enhance Entain’s operational efficiency and potentially position it for a sale or breakup. 

Reducing complexity

Last week, Entain reported a loss for full-year 2023 and cautioned investors about forthcoming regulatory changes that are anticipated to negatively impact profits in 2024.

Interim CEO Stella David also emphasised a commitment to simplifying operations, citing accumulated complexity, particularly from numerous past acquisitions.

“The problem with complexity is that it’s hampering our agility, and therefore our ability to get things done,” she said.

However, she stressed that 2024 will be a year of transformation, and “progressively day by day, we will demonstrate that the group can get back to structural growth as we exit the year.”

Last year, Entain formed a capital allocation committee, with activist investor Ricky Sandler, founder of US-based fund Eminence Capital and the first activist to go public with criticisms, having a seat on the committee alongside Entain chair Barry Gibson and another board director. 

Under review

When presenting Entain’s results last week, Gibson said the committee had “commenced a review of Entain’s markets, brands and verticals” with an aim “to help focus the organisation, improve competitive positions and maximise shareholder value.”

However, both Gibson and David stressed that the committee’s work has only just begun.

“The capital allocation committee is going through market by market and making some determinations,” the FT quoted an unnamed source.

“It’s all about working out what market Entain wants to be bigger in and what markets are extraneous and could be sold.”

Meanwhile, another individual familiar with Entain’s operations stressed that “disposals may not necessarily follow as a result of review, it is about assessing how best to maximise value”. 

Entain and Moelis declined to comment when contacted by the FT.

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