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Shares in London-listed 888 Holdings jumped more than 20% in early trading after the business revealed a new major shareholder.

FS Gaming Investments, a consortium which includes former GVC Holdings CEO Kenny Alexander, former director Stephen Morana and former chairman Lee Feldman, has secured a 4.55% shareholding in the business.

In addition, former GVC COO/Entain CEO and current DAZN Group CEO Shay Segev, transferred the voting rights of a 2.02% shareholding to the group, giving it total voting rights of 6.57%.

Shake things up

A note from investment bank Peel Hunt suggested that the “well-informed group of investors could contribute to finding a new CEO, accelerating the existing strategy and finding new directions for growth” at 888.

Meanwhile, sources told the Financial Times the group was “likely to push for a speedier integration between 888 and William Hill to drive down costs, and could request a board seat for Alexander or Feldman”.

In the longer term, sources said 888 could even become a target for a partial sale or takeover by another gambling firm or private equity vehicle.

“It’s a really quality, undervalued asset,” one person close to the matter told the FT. “There’s some top-quality brands and top-quality people in the business.”

Bloomberg also suggested the new investors would push for change at 888, and that the party had already contacted the operator with “proposals to boost the company’s value”.

Those proposals could include leadership and strategy changes, according to a report published on the matter yesterday (6 June).

Background information

888 shares remain down over 50% over the past year after a series of major challenges saw investors lose confidence in the business.

Its £1.95bn acquisition of William Hill’s non-US assets left the firm hamstrung after interest rates spiked, as 888 was left with net debt totalling 5.6x its earnings at the end of last year.

CEO Itai Pazner then left the business in January of this year following an internal compliance investigation into practices relating to VIP customers in the Middle East.

Since then, 888 has been led by executive chair Lord Mendelsohn, but has not hired a permanent replacement for Pazner as CEO.

Industry reaction

An 888 spokesperson told Bloomberg that the company welcomed the new investment, which “we believe reflects the significant value creation potential in our business.”

The spokesperson added: “The board remains highly confident in its long-term strategy to maximise value for shareholders. We look forward to updating and engaging with all our shareholders as we continue to deliver against our clear strategic and operational priorities.”

Meanwhile one source told industry newsletter Earnings+More that the investment from FS was “opportunistic,” reflecting the fact “these guys are dealmakers.”

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