Women in gaming: Entain's Jette Nygaard-Andersen on M&A

In an industry characterised by a consolidation frenzy over the past decade, very few operators have demonstrated an appetite for acquisitions quite like Entain. M&A is primarily how this once-obscure company (previously GVC) ballooned from a £26m firm with one digital casino targeting the German market into an online and retail gambling giant with a market cap at the time of writing of £9bn, backed up by a chock-a-block stable of betting, casino, bingo and poker sites. In the last five years alone, around 20 brands have been acquired by the FTSE 100 firm through a mixture of blockbuster deals – Ladbrokes Coral’s acquisition in 2018 was the largest and most complex in terms of integration onto Entain’s tech platform – and smaller, bolt-on buys.

“M&A is an integral part of our growth strategy. We look at targets in both new and existing markets, with the key criteria being that they are regulating or regulated,” explains Entain CEO Jette Nygaard-Andersen. Indeed, this strategy fits with the company’s target of 100% of revenue generated from locally regulated markets by the end of 2023. Entain, which is licensed in 27 jurisdictions, is well on track to achieve this goal as 99% of NGR at the end of 2020 was derived from regulated or regulating markets. Picking off established brands in regulated territories allows the company to quickly gain a presence and scale in new or growing markets. Prime examples include the majority stake taken in Georgian operator Crystalbet in 2018, and in the same year Australia’s Neds International was snapped up for an initial £37m.

Last October, Entain acquired Portuguese operator Bet.pt for an upfront fee of €50m. And in April, shareholders gave their support to the purchase of Enlabs, the Baltics-centric firm behind brands including Optibet and Laimz. For Nygaard-Andersen, who took over the reins as CEO from Shay Segev in January, the benefits of both deals are clear: “The acquisition of Bet.pt takes us into the recently regulated, and rapidly growing, Portuguese market which is expected to more than double to around €450m in value by 2023. Enlabs predominantly operates online sports betting and gaming brands across the fast-growing Baltic region. It is the market leader in Latvia, the second largest in Estonia, and a top-five operator in Lithuania.”

Last November, Enlabs completed the acquisition of Global Gaming, which Nygaard-Andersen sees as a way to extend into the Nordics and a “springboard” to further expansion in Russian-speaking countries once they regulate. Entain is “constantly assessing” M&A opportunities, but what considerations are weighed up when kicking the tyres on a potential target? “With all acquisitions it is about the team and the people, and about getting the fundamentals right,” she replies. “Does it complement the existing business? Do they have the right people, teams and skills that can add to our own? Does it present value to shareholders? Is there a significant growth opportunity? Is there a good cultural fit?

“Once those questions have been addressed and the short-term technical challenges of getting the deal done, then it is all about the integration process.” The latest quarry in its crosshairs is Tabcorp, with a revised offer of A$3.5bn tabled at the end of April to acquire the Australian operator’s wagering and media business. If successful, the acquisition would significantly strengthen Entain’s hand Down Under. While Nygaard-Andersen is tight-lipped on the pursuit, she and the company are also eyeing up targets outside igaming. “We see plenty of scope for further consolidation M&A opportunities, potentially in broader but [the] related field of interactive entertainment such as VR and gaming. Fundamentally, Entain is a tech-led global interactive entertainment business and there are many opportunities for us to expand our horizons.”

In today’s fragmented online gambling environment, scale and breadth are critical factors. And although Entain has managed to become one of the industry heavyweights through M&A, organic growth cannot be overlooked. For example, 97% of the company’s growth is in markets growing at over 10% a year, and outside the UK around 87% of the revenue Entain generates is in territories where it has less than 20% online penetration. “Despite being the third largest operator, we still only have less than 10% of the global market, so there is lots to still go after,” the CEO says.

Of course, though, the hunter can always become the hunted. That was the case recently when MGM Resorts, Entain’s JV partner in the BetMGM venture, attempted a takeover of Entain with an £8.1bn bid. Entain spurned MGM’s advances as it was deemed to undervalue the business, yet it seems unlikely this is the end of the matter.