Ladbrokes owner Entain begins phased exit from CEE business with $483 million stake sale
Entain's Strategic Stake Sale and Business Impact
Details of the Stake Sale Agreement
June 25 (Reuters) - Ladbrokes-owner Entain said on Thursday it had agreed to sell a 20% stake in its Central and Eastern Europe business to partner EMMA Capital for €425 million ($483 million), marking the first step in a phased exit aimed at reducing debt.
Background and Context
Exploration of Strategic Options
The company had begun exploring options for its joint venture in the region, including a potential sale, Reuters reported last week, citing three people familiar with the matter.
Operational Pressures and Market Shifts
Entain, which operates BetMGM in the U.S. along with MGM Resorts and Ladbrokes in the UK, has been under pressure to reduce costs to offset the impact of higher online gambling taxes in Britain though it has benefited from a shift toward online betting and gaming.
Changes in Ownership Structure
Stake Distribution After the Sale
The disposal will lower Entain's stake to 47.5% from 67.5% and raise EMMA Capital's stake in Entain CEE to 42.5% while a voting agreement also gives the Czech investment firm sway over the Juroszek family's 10% interest.
EMMA Capital's Perspective
Statement from EMMA Capital
Increasing the stake to become the largest voting shareholder was a completely logical next step, said Pavel Horák, Investment Director at EMMA Capital in a statement.
Future Plans and Financial Performance
Ongoing Evaluation of Remaining Stake
Entain said it would keep evaluating options to exit its remaining stake in the business, which owns SuperSport in Croatia and STS in Poland. The business generated £183.7 million ($242.25 million) EBITDA last year.
Market Reaction and Updated Guidance
Share Price Movement
Shares in the Isle of Man-based Entain rose as much as 4% to 576.6 pence by 1350 GMT.
Profit Margin and Core Profit Expectations
The company also updated guidance as the CEE business would no longer be fully consolidated. It now expects the annual core profit margin for its online division to be in the range of 21% to 22%, down from 23% to 24%, and said it was comfortable with market expectations for group core profit around £1.13 billion.
Currency Exchange Rates
($1 = €0.8821)
($1 = £0.7583 )
Reporting Credits
(Reporting by Nithyashree R B and Ankita Bora in Bengaluru; Editing by Jonathan Ananda, Tasim Zahid and Elaine Hardcastle)
