Entain Plc said Monday its CEO Shay Segev would leave the company days after it rejected an $11 billion takeover bid from MGM International.
Segev led the UK-based Entain, formerly known as GVC Holdings, for only seven months when he took over from Kenny Alexander, who left the job after a 13-year tenure. According to Entain, Shay Segev gave notice of his intention to leave the global sports-betting and gaming group to become Co-CEO of DAZN, a London-based sports streaming platform with global market access. Segev will continue his existing role for six months, or until the company finds someone to succeed him, before assuming his new role at DAZN.
As the Board is underway to find Segev’s successor, Entain chairman Barry Gibson said he was sorry for his top officer’s departure, but added Entain “could not match the rewards DAZN had promised.” The CEO’s departure amid the critical transitional phase could have wide-ranging implications for US sports betting, and particularly for MGM Resorts International that co-parents BetMGM with Entain in a joint-venture.
Has The Resignation Anything To Do With MGM’s Offer?
The departing CEO said MGM’s takeover approach had nothing to do with his resignation. “I’ll be sad to leave Entain… but I have been offered a role which offers me an entirely different opportunity,” said Segev. He added, “I also want to emphasize that the recent approach from MGM Resorts has had clearly no bearing on my decision, and I fully support the Entain Board’s decision to reject their (MGM’s) proposal.” Despite this, speculations were rife regarding the unusual timing of the CEO’s departure.
Gibson sought to dispel the notion by delinking the two events and confirmed that the resignation changes nothing with respect to the Entain Board’s view of the recent takeover proposal from MGM. “The Board remain unanimous in our view that the proposal significantly undervalues the company and its prospects.” Gibson said that Entain has delivered 20 quarters of double-digit online growth, and its future prospects have been substantially increased by Entain’s new strategy, which was set out in November. The chairman also said the Entain’s global business is entirely based on its own technology, offering its best-in-class entertainment services in over 20 nationally-licensed countries.
What Does The Departure Mean for MGM?
Despite the emphatic statements from both the resigning CEO and the Chairman of Entain, analysts at Jefferies and Peel Hunt predicted that Segev’s departure makes an acquisition by MGM more likely. Jefferies analysts said in a note, “We think MGM may now be more encouraged to opportunistically raise its bid,” adding that they saw a 1650p valuation for Entain, almost 20% higher than MGM’s current proposal.
The US casino giant has the backing of its biggest shareholder InterActive Corp (IAC), to enhance its previous offer of $11 billion. However, IAC owner Barry Diller is not overly ambitious on the prospects of getting a deal done. While talking to a news outlet, Barry said, “It would be great if MGM could do this with Entain, but whether it happens or not, I’m skeptical, and if it doesn’t, I’m sanguine.” In any case, he said he is absolutely sure MGM, in which he holds 12% shares, will be in a leadership position.
Despite his short time leading Entain, CEO Segev steered the company through a pandemic-led crisis, promised to exit the unregulated sports betting market by 2023, and changed the company’s name from GVC.