Shares in Ladbrokes owner Entain (ENT) sank to the bottom of the FTSE100  leaderboard on Wednesday, falling 10% to £11.86 after placing roughly £600 million of new equity with institution investors at a 7% discount to part finance the acquisition of Polish gambling firm STS Holding.

The new shares represent approximately 8.3% of Entain’s issued ordinary capital. Retail investors were able to participate at the same £12.30 price via the PrimaryBid platform where 486,010 shares were made available for purchase.

WHAT IS ENTAIN BUYING?

STS is the number one sports betting operator in Poland where the gaming market is expected to grow by 12% per year over the next two years, according to Entain.

In addition, STS is well positioned to benefit from Poland’s online casino market should it become fully regulated soon. The Polish market represents a total addressable market opportunity worth $1.6 billion, split 52% sports betting and 48% casino and 'other'.

The net cash consideration payable by Entain is around £450 million. Entain anticipates the acquisition will be earnings accretive in the first full year of ownership.

Including expected synergies, the price represents a 2024 EV to EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortisation) multiple of less than 10 times.

STS’s chief executive Mateusz Juroszek and his father Zbigniew Juroszek, who through their respective family foundations hold approximately 70% of STS's share capital, will join the board of Entain CEE (Central and Eastern Europe) and will re-invest a proportion of their proceeds in return for a 10% economic stake in Entain CEE.

WHAT DO THE EXPERTS THINK?

Betting consultancy Regulus Partners commented: ‘While not cheap, a fair price is being paid for a very strong market position which is hard to leverage outside Poland, but which a global operator can leverage through a combination of scale, portfolio risk management and regulatory optionality. In short, we see Entain’s acquisition of STS as a high quality, low risk deal at a win-win price.

MORE STAKE BUILDING IN 888 HOLDINGS

Meanwhile, former senior Entain executives Lee Feldman, Kenny Alexander and Stephen Morana, have proposed themselves as candidates to fill the key roles of chairman, chief executive and finance director respectively at 888 Holdings (888), according to Berenberg.

The trio revealed a 6.6% stake (7 June) in the online gaming and gambling firm through their investment vehicle FS Gaming with a view to making management changes.

Today, event-driven investment firm HG Vora Capital Management and its affiliates announced they had also taken a 5.6% stake in 888 showing there is building interest from activists. 888 shares are up 5% today and have gained over 15% since news of the FS Gaming stake was revealed.

LEARN MORE ABOUT ENTAIN AND 888 HOLDINGS

 

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