Stocks Tracker: Takeover turmoil, boardroom battles and Q3 questions
EGR analyses the share price movements of major industry players including Entain, DraftKings and Kindred Group
DraftKings
1 October closing: $50.58
29 October closing: $46.68
Peak October closing: $50.58
It was a month full of M&A speculation for DraftKings having mulled over making a multi-billion-dollar formal offer for FTSE 100 firm Entain, which saw the US operator’s monthly share price ebb and flow.
In September, DraftKings proposed a $22.4bn offer for Entain, with the Boston-based operator given an original deadline of Tuesday 19 October to make a formal bid before being given a “Put Up or Shut Up” deadline of 16 November by the Entain board.
Up until Tuesday 19 October, DraftKings’ share price had moved significantly from its monthly opening of $50.58, with news on Wednesday 13 October that a lawsuit was being prepared by shareholder Jiahan Yu regarding undisclosed information relating to the history of in-house tech provider SBTech, which eventually saw shares fall to $48.15 from $50.10 by the close of the week.
Moving into the final week of October and DraftKings’ stock had slumped to a monthly low of $46.57 by Monday 25 October before the firm walked away from its potential swoop for Entain.
This move saw DraftKings leap to $48.75 on Tuesday 26 October, with CEO Jason Robins citing the company’s tech stack, product and brand as key markers as to why it could be a standalone success without Entain. However, the rise was short-lived, as by Friday 29 October, the stock had fallen to $46.68 in the final day of trading of a tumultuous month.
Entain
1 October closing: 2,156p
29 October closing: 2,048p
Peak October closing: 2,171p
Entain must be feeling the love having faced offers from MGM Resorts and DraftKings this year.
Entain reported a 10% uptick in digital net gaming revenue (NGR) on a constant currency basis for Q3 2021 on Tuesday 12 October and confirmed an expected annual EBITDA of £850m, but words of warning from CFO Rob Wood on the impact of leaving the Netherlands meant the market didn’t respond positively.
The operator anticpates leaving the Dutch market will result in an estimated £5m monthly loss in EBITDA, while Wood said Q4 could see online growth finally end due to a series of mitigating factors.
As a result, Entain’s share price fell from 2,108p on Monday 11 October to 2,073p on Tuesday 12 October, before continuing to drop throughout the rest of the week.
On the other side of the talks with DraftKings, Entain did see its share price skyrocket following its “Put Up or Shut Up” deadline announcement on Tuesday 19 October, with the market closing out at 2,171p – a monthly high.
However, the joy wasn’t to be maintained. A week later on Tuesday 26 October following DraftKings’ confirmation it would no longer pursue a deal, Entain’s share price plummeted to 2,002p from the previous close of 2,137p.
Betsson AB
1 October closing: SEK70.70
29 October closing: SEK60.02
Peak October closing: SEK70.70
As the leaves fell from the trees during October, so did Betsson’s share price having been rocked by a boardroom drama that consumed the operator since September.
CEO Pontus Lindwall was given his marching orders in September to cause an initial decrease in share price.
A month of sustained share price decline from the monthly opening and subsequent peak of SEK70.70 failed to show any signs of improvement, with hopes hinging on the group’s Q3 results heading into the final week of October.
However, positive news arrived just a day before on Monday 25 October as Lindwall was reinstated as CEO by the Malta-headquartered firm to bring a curtain down on a disruptive situation.
Betsson chair Johan Lundberg said: “We have had several discussions with Betsson’s main stakeholders, the Betsson management team, Betsson employees, as well as many of the largest shareholders,” Lundberg explained.
“Based on those discussions, the current board does not believe that it would be good to change leadership now,” he added.
Tuesday 26 October saw Betsson announce a 3% year-on-year revenue rise for Q3 2021 to €173.4m, with sportsbook revenue alone climbing by 24% to €43.6m.
Despite losses from leaving the Dutch market, Betsson’s positive Q3 results, and the reinstalment of Lindwall as CEO, saw the firm’s share price rise to SEK58.98, its highest point since Thursday 7 October (SEK61.20).
Kindred Group
1 October closing: SEK138.95
29 October closing: SEK120
Peak October closing: SEK138.95
While Kindred Group did not have to deal with M&A talks and boardroom politics in October, the Stockholm-listed firm was not without its worries.
Two key flashpoints for Kindred during October caused the market to react, with the first coming on Monday 11 October following a landmark agreement resulting in a significant change to tax laws in Malta, where the firm is headquartered.
A 15% minimum corporate tax rate agreement was struck by the Organisation for Economic Co-operation and Development which will affect multinational enterprises (MNEs) from 2023. While local companies pay 35% on profits, international firms in Malta currently pay just 5%.
Kindred saw its share price drop by 4% during the day’s trading before closing out at SEK109.55 compared to the previous Friday’s closing price of SEK111. The operator had seen its share price at the start of October continue to be impacted by its decision to block Dutch players from accessing its services following the regulation of the market.
Fast forward to the final week of October and bated breath for Kindred’s Q3 results. On Monday 25 October it was revealed the share of Kindred’s Q3 revenue derived from harmful gambling had fallen to 3.3% compared to 4.3% in Q2 2021.
This positive was to be a false dawn. Kindred’s share price on Tuesday 26 October closed out at SEK128.30 before falling significantly the following day, coinciding with the full Q3 financial report.
Despite posting a 6% year-on-year revenue rise to £298.4m and a 16% uptick in casino revenue, the operator failed to charm the market with the share price dropping to SEK116.70.
Regulus Partners analyst Paul Leyland said Kindred’s Q3 results were “solid rather than exciting” as revenue from France decreased 22% and sports betting revenue fell by 4%.