Ricky Sandler, CEO of activist investor Eminence Capital, has been appointed to Entain’s board in a potential M&A signal.
Sandler’s appointment, which is accompanied by a legally binding relationship agreement, is a sign that Entain’s management may have made peace with the multiple activist investors which were instrumental in ending Jette Nygaard-Andersen’s tenure as group CEO.
The new non-executive director, who joins the board for a three-year term, will also join the People & Governance and Capital Allocation committees.
In this position Sandler will play a role in deciding the composition of the board, choosing the next chief executive and helping decide on the company’s capital allocation strategy, including for matters such as share buybacks and M&A.
The Capital Allocation committee was newly established in November by Nygaard-Andersen in the face of mounting criticism over Entain’s M&A strategy.
In a statement, Entain highlighted that the final appointed member of the board must be someone “mutually agreeable” to both the operator and Eminence.
Last month, the Sunday Times reported that Entain and Eminence were close to agreeing a deal that would see Sandler appointed to the board.
“Entain is a robust business with market-leading brands, a unique technology platform, and enviable positions in key geographies around the world,” said Sandler.
“I look forward to working with my fellow directors to help Entain achieve long-term success and create lasting value for its shareholders.”
Is Sandler an olive branch to the activists?
Sandler attacked Nygaard-Andersen’s leadership in the summer with the release of an explosive open letter that blasted the business for its “illogical” strategy of funding bolt-on acquisitions with undervalued shareholder capital.
In the letter Sandler also argued that Entain had multiple attractive paths including “the potential divestiture of some or all of its stake in the BetMGM JV.”
According to the Financial Times, the activists had been pushing for Sandler to be appointed to the board to play a role in filling its remaining vacancies.
Activist firms included Eminence Capital, Sachem Head Capital Management, Dendur Capital, P Schoenfeld Asset Management and Corvex Management.
In December, Corvex became the latest investor to acquire a significant portion of the business with a 4.4% stake.
In a short statement the fund castigated Entain’s “unacceptable” previous performance, though it added that the recent change in management was a necessary first step to change.
“I am pleased to welcome Ricky to the board of Entain,” said Entain chair Barry Gibson. “Ricky has a deep knowledge of our business and a firm belief in the quality of our operations and substantial growth opportunities.
“We look forward to benefiting from his perspectives and expertise as we work to drive value for all Entain shareholders.”
The relationship agreement
The fund CEO’s appointment is subject to a relationship agreement signed by Sandler, Eminence and Entain.
In the agreement, the company committed to recommending Sandler for election at its 2024 AGM.
Under the terms, Sandler can be removed if Eminence agrees to any takeover bid not recommended by the board of directors or votes against any board approved extraordinary transaction.
Eminence is also limited from making any disparaging statements about the business, increasing its ownership of Entain shares above 8%, and proposing any shareholder resolutions.
