Entain may sell the Crystalbet Georgia brand following a review of the strategic direction. The group has determined that this operation is not “core”. Several parties have already expressed interest.
In January 2013, the Capital Allocation Committee of Entain’s board began a review, examining its market, brand and vertical portfolio. Entain stated that the review was undertaken to maximise shareholder value, and reflect the progress of the company’s operations.
In March, the Financial Times revealed that Entain hired Wall Street company Moelis for asset sales advice. It was just one week after Entain reported a loss of PS936.5m ($1,19bn/EUR1.10bn).
The committee’s final report outlined several key findings. One of these was to look at “strategic options” for Crystalbet which had been acquired by Entain predecessor GVC, in part, in 2018. Entain acquired the 49% remaining stake in Crystalbet in 2021.
Entain stated that “the committee concluded the brand was not core to the group.” Entain said that strategic alternatives will be explored for the business, as well as interest from interested parties.
Entain Review: What’s more?
The committee published, in addition to the potential sale of Crystalbet, several other conclusions that came out of the strategic review.
Entain’s “appropriate portfolio” of strategic assets is comprised of brands, geographic footprint, and capabilities. This ensures that it will be able to achieve high-quality growth over the long term.
Entain was also praised for its future prospects. The committee cited a “significant benefit” from focusing on organic revenue growth and margin expansion, as well as winning in the US.
The committee also deemed the balance sheet of the group and its leverage to be “robust”. The committee also praised the group’s balance sheet and leverage position as “robust”.
Analysis of key market progress
The committee’s review also included an analysis of the key markets for the group. Entain’s operational progress towards strategic goals was also analysed.
Entain expects growth to resume in the UK by the end of this year. The “levelling” of the playing field is due to the introduction in September of a new PS2 slot limit and a voluntary industry code for player safety gambling checks.
Entain CEE is also performing well in other parts of Europe. In particular, the committee noted that prospects for liberalisation of online casinos in Poland are increasingly positive.
The committee states that BetMGM’s product roadmap is moving along well in the US. The committee highlights the launch of Major League Baseball as well as the National Basketball Association in new markets.
Entain has also recently received approval for a Nevada Gaming Commission full license in that state. The license covers the entire Entain portfolio and all subsidiaries.
The committee also says that Entain has returned to a strong revenue growth of double digits in Brazil for Q2. The committee adds that this is due to the efforts made by Entain to increase customer retention and acquisition.
The committee also praised Project Romer, a project that aims to achieve an EBITDA online margin of 28 % by 2026. This will increase to 30 % by 2028. Entain will simplify its group in order to increase operational efficiency and cost savings. Entain will also make cross-cost savings of PS100m before 2025.
Entain still has work to be done
Barry Gibson, Entain’s chairperson, said that he was “pleased” by the results and the progress made. Entain still has work to do, however.
Gibson stated that “While there is still more to be done to improve the performance of our operations, the board has been pleased with the progress Entain has made so far by 2024 to date in accordance with our strategy.”
The group’s core strengths are its brands, products and services. This allows it to compete in all markets. Our position as a leader in the betting and gaming industry is unwavering. “The board is looking forward to providing a further update on the progress of the company at the August interim results.”
The committee also stated that it will regularly evaluate strategic progress, and examine options for maximising shareholder value. Entain’s statement includes the ongoing supervision of all capital commitments.
Entain needs to be sold?
Rewind to the most important finding in the review, and consider the sale of Crystalbet. Entain needs to sell Crystalbet?
First, the massive loss Entain reported in 2023 is difficult to overlook. The PS936.5m loss posted for the year-end results is far more significant than the revenue increase of 11.0% to PS4.77bn. This was aided by the purchase of new brands.
Entain incurred costs as a result of this M&A. In 2023, the purchase of STS, a Polish company with a large Polish market share sparked dissent among Eminence Capital shareholders.
Entain has decided to sell assets in order to recover some costs.
The Financial Times reported in March that assets which are not directly connected to Entain’s platform would be sold first. These assets accounted for almost a third (or more) of the net gaming revenue in the first six months of 2013.
Crystalbet, for example, is such a brand. Crystalbet is one such brand.
Entain is committed to growing in its core markets including the UK, US and UK.
