Shares in 888 Holdings rose more than 20 percent on the news that the company has a new major shareholder. This has resulted in significant value creation for the company.
Consortium FS Gaming Investments has secured a 4.55 percent shareholding in 888. The consortium includes Kenny Alexander, Stephen Morana and Lee Feldman, former CEO, Director and Chairman respectively of GVC Holdings. The news that Shay Segev transferred voting rights of 2.02 percent shareholding to the group, giving it total voting rights of 6.57 percent. Segev is CEO of DAZXN Group and was formerly CEO of Entain and COO of GVC.
Speedier integration of 888 and William Hill
According to investment bank Peel Hunt, it is likely that the Group will appoint a new CEO and push forward for a quick integration between 888 and William Hill to maximise value for its shareholders. This would drive down costs and make room on the Board for Alexander or Feldman. To boost the company’s value, it is expected that 888 will divest via a private equity vehicle or a partial sale or takeover by another gambling business. It is considered to be an attractive investment due to the top quality brands and talent in the business.
Change in leadership
CEO Itai Pazner left the business in January this year following an internal compliance investigation into practices relating to VIP customers in the Middle East. Leadership and strategy changes are now also in the pipeline as 888 shares remain down by over 50 percent during the past year as investors lost some confidence in the business. The company is now being led by Lord Mendelsohn who is also Executive Chairman.
Fines of £17 million from UK Gambling Commission
The UK Gambling Commission fined the company £9.4 million earlier this year and £7.8 million in 2017 for social responsibility and money laundering failings. The Chief Financial Officer resigned followed by the company’s CEO. Investors have also expressed concern about 888’s £1.95 billion (US $2.43 billion) acquisition of William Hill’s non-US assets. This left 888 with net debt totalling 5.6x its earnings at the end of last year. In 2022, the company posted a £115m pre-tax loss due to costs associated with this merger.
888 Holdings plc (888.L) is trading at GBP 97.01 (-3.47 percent).