FS Gaming Investments, an investment group led by former GVC CEO Kenny Alexander, revealed Tuesday it has taken a 6.57% stake in William Hill parent 888 Holdings.
It’s the first move of note by Alexander since his surprise 2020 departure from GVC, which later became Entain Plc (OTC: GMVHY). FS Gaming Investments also has financial backing from former GVC Chairman Lee Feldman and Shay Segev. Segev succeeded Alexander at GVC and was the architect of the gaming company’s acquisition of Ladbrokes and its transformation to Entain.
The new 888 investors reportedly view the gaming company as undervalued owing to its nearly $2 billion in debt and a recent series of compliance missteps at William Hill that led to some of the largest penalties ever levied by the UK Gambling Commission (UKGC).
Those issues came to light after former chief executive officer Itai Pazner departed amid concerns about the operator’s anti-money laundering protocols. Pazner’s resignation arrived just days after it was revealed Yariv Dafna would vacate the chief financial officer role. Just two months prior, the Gibraltar-based company was slapped with compliance-related fines by the General Directorate for the Regulation of Gambling, which is Spain’s gaming regulator.
888, William Hill Marriage Has Been Bumpy
Last July, 888 paid $765 million to Caesars Entertainment (NASDAQ: CZR) to acquire William Hill’s non-US assets.
At the time, it was viewed as a shrewd move by the buyer due to its dearth of sports betting exposure and the fact that William Hill is one of the most venerable brands in the European sportsbook landscape.
However, the aforementioned compliance failures and the removal of the stock from the FTSE 350 Index have weighed on the shares, which are lower by 60% over the past 12 months. That’s opened the door to outside investors, such as Alexander’s FS Gaming Investments, to get involved and push for change.
We welcome the investment of FS Gaming which we believe reflects the significant value creation potential in our business,” according to an 888 statement issued to UK media. “The board remains highly confident in its long-term strategy to maximise value for shareholders. We look forward to updating and engaging with all our shareholders as we continue to deliver against our clear strategic and operational priorities.”
Unidentified sources with knowledge of the matter told the Financial Times that FS Gaming could push 888 to more efficiently integrate William Hill and, potentially, grant board seats to Alexander and Feldman.
888 Could Be Takeover Target
Activist investors can argue for a variety of changes, including corporate actions such as asset divestments or outright sales. Both are seen as longer-ranging possibilities with 888.
The company has been the subject of takeover talk in the past and there is recent precedent for activist investors pushing for sales of European sportsbook operators. For example, Swedish online gaming operator Kindred Group Plc (OTC: KNDGF) is rumored to be readying itself for sale, and it’s likely Keith Meister’s Corvex Management has a hand in that.
Potential buyers for 888 weren’t identified, but due to its control of William Hill, the company could draw interest from Europe-based rivals as well as private equity firms if it decides to sell itself.
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