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Dodge & Cox doubles Entain holding to over 10%

| By Robert Fletcher
US mutual fund company Dodge & Cox has doubled its holding in Entain to more than 10%, making it the second-highest single shareholder in the business.
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Dodge & Cox increased its holding from 5.01% of the total shares in Entain to 10.33%. The company now holds 66,001,318 of the total voting rights in the Ladbrokes owner.

The Capital Group Companies is the only single entity to have a larger holding in Entain than Dodge & Cox. Capital Group currently has an overall holding of 14.81%.

Dodge & Cox first bought into Entain in September 2022. It also has holdings in pharma giant GSK and Google owner Alphabet. As of December 2022, the San Francisco-headquartered business had $323bn in assets under management.

After the news was revealed yesterday (6 November), Entain shares closed the day up 0.11% at £954 (€1,099/$1,175).

Entain reveals 7% revenue increase in Q3

The holding increase actually took place on the same day Entain published a business update (2 November). Entain revealed a 7% increase in net gaming revenue for Q3, with growth in all business segments.

Online revenue was 9% higher year-on-year, helped by increases in both sports and gaming revenue. Retail revenue – covering operations in the UK, Ireland, Italy, Croatia, Poland and New Zealand – also climbed 4%.

Turning to the US, net gaming revenue from the BetMGM joint venture with MGM Resorts was 8% higher. Entain said revenue for this part of the business was approximately $458m.

Long-term growth plans 

Entain also used the update to set out key initiatives to further improve its operational strategy.

Among these is a commitment to a market portfolio more optimised for organic growth. This includes a prioritisation of high growth, high return markets such as the US, Brazil, Central and Eastern Europe – helped by the recent STS acquisition – and New Zealand.

Entain will also target profitable growth in core markets including the UK, Australia, Italy, Germany and the Baltics. 

As for longer-term plans, Entain will deliver Project Romer, with the goal of reaching an online EBITDA margin of 28% by 2026 and 30% by 2028.

To achieve this, Entain plans to simplify the group to improve operational leverage and drive cost efficiencies. It will also seek to make cross cost savings of £100m by the year 2025.

In addition, Entain has pledged to improve its governance. This includes appointing four new non-executive directors, the first of which was recently confirmed with the addition of Amanda Brown.

M&A focus at Entain

Aside from this, M&A appears to be a major part of Entain’s plans moving forward. As well as the STS acquisition, Entain has sealed a number of stand-out deals in recent times.

Last month, Entain acquired sports modelling, forecasting and analytics specialist Angstrom Sports. The deal is valued at up to £203.0m. Other recent acquisitions include SuperSport in Croatia, purchased by Entain at the end of 2022.

Meanwhile, Entain has signed off on a series of M&A bolt-on deals, with Angstrom one of these. In June, Entain purchased Tiidal Gaming NZ, owner of esports betting developer Sportsflare. This meant it added a number of betting products optimised for esports – alongside Unikrn.

However, Entain last month revealed it will scale back B2C operations at the Unikrn esports betting arm as part of a repositioning of its esports offering.

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