Mark Kleinman is Sky News’ City Editor and is the man who gets the Square Mile talking in his weekly City A.M. column. Today, he looks at Entain’s future chief, Legal and General and Dexters
Entain’s new CEO will be gambling with career
Talk about a glutton for punishment. I hear that Entain, the FTSE-100 gambling group, is on the brink of putting its chips on its next chief executive.
Industry sources tell me that the anointed individual won’t be Henry Birch, the former Rank Group and Very Group boss, who made it to the final stages of the recruitment process.
For the moment, the identity of Jette Nygaard-Andersen’s successor is a mystery. Whoever Entain’s new boss is, though, will need an iron will, a persuasive approach to sceptical investors and a deft touch at corporate finance.
Make no mistake: Entain is in a mess. From huge compliance failings to misguided takeovers, the company has become the gambling equivalent of Royal Bank of Scotland 15 years ago.
Its share price has fallen by more than 40 per cent over the last year, and by even more since it rejected a takeover bid from MGM Resorts in 2021.
Little wonder, then, that shareholders are shedding few tears over the departures of either Nygaard-Andersen or Barry Gibson, its chairman.
Leading investors want its new leadership to restore the stock market’s confidence in the company’s ability to deliver against its targets each quarter without a nasty surprise.
Entain’s travails have drawn the attention of a string of activist investors, with Eminence Capital’s Ricky Sandler joining its board in January. Others lurk in the shadows, as well as in plain sight.
One shareholder said the perception of both the industry and fund managers is that Entain has run out of growth outside the US, while it faces losing out to Flutter Entertainment and DraftKings in the US.
The company has been trying to accelerate its clean-up, firstly by agreeing a £615m settlement over its failure to prevent bribery at its Turkish operations; and secondly by outlining potential disposals of non-core assets alongside exits from unregulated markets.
Investors don’t appear to believe, though, that either of those priorities can be executed smoothly while also restoring growth to the pace shown by industry rivals.
Whoever lands the top job will also be taking a massive gamble – with the fate of Britain’s best-known bookie, and their own career.
Simoes’ L&G plan needs Patron for housebuilder
Is anything more predictable during British election campaigns than pledges to step up national housebuilding? Other than a prominent politician being milkshaked on the campaign trail, it’s hard to think of one.
And so 2024 is proving no exception, with Labour and the Conservatives both promising to deliver at least 1.5m homes during the next parliament.
It’s the first significant move of Antonio Simoes, the former HSBC and Santander executive who joined as L&G’s new boss earlier this year.
Yesterday’s capital markets day saw Simoes promise a simplification of the group as well as a £200m capital return to shareholders – its first buyback in over a decade. Investors were underwhelmed, sending the shares down by 5pc.
A plan to exit non-core assets may yield mixed results, although the sale of Cala should yield a healthy return. As I revealed on Sky News yesterday, Persimmon, the FTSE-100 housebuilder, is facing competition to buy it from the private equity firm Patron Capital Partners – Cala’s former owner.
Patron could use debt (albeit more expensively than a year ago) to fund a purchase of Cala, while analysts say that Persimmon would be likely to raise equity to finance a deal.
Banking sources say that bidders for Cala have tabled indicative offers of less than the target’s book value, which would represent a discount to recent housebuilding sector deals.
L&G may yet push its suitors to edge their bids higher, but for Simoes, quibbling over marginal gains in price is less important than the refocusing of L&G he has set out to achieve.
Dexters is a cert to move on rivals
And there goes another one. The latest in a string of UK estate agency deals, announced last week, saw Guild, a confederation of independent estate agents, taken over by The Property Franchise Group, the London-listed company.
In recent months, BNP Paribas has hoisted a ‘for sale’ sign above Strutt & Parker, while the owners of private equity-backed Lomond Group have hired bankers to hunt new backers.
With each month that passes, the absence of a formal takeover bid for London-listed Foxtons Group becomes more surprising – especially given that a preliminary, informal discussion with Leaders Romans Group, owned by buyout firm Platinum Equity, took place earlier this year.
The missing piece of the jigsaw? Dexters, the Oakley Capital-backed chain chaired by Justin King, the former J Sainsbury chief executive.
Industry sources say Dexters could be a logical suitor for Foxtons, but that there has been no approach to date. At last month’s Oakley annual investor meeting, though, a presentation on Dexters’ progress was received with a sense of anticipation that Dexters will be among the prime consolidators of a still-fragmented industry, according to one investor present. Developing, as they say.