Analysts Suggest Italy Could Be Entain’s Next Major Asset Sale

According to analysts at Rothschild & Co Redburn, Entain’s Italian operations could become the company’s next major divestment following the sale of part of its Central and Eastern Europe business.

The gambling group has agreed to sell an initial 20% stake in its CEE division, including STS and SuperSport, to joint venture partner EMMA Capital for £366 million. This transaction values the business at an enterprise value of around £1.83 billion and implies an EBITDA multiple of 9.3 times, around 45% higher than Entain’s current trading multiple.

Analyst Andrew Tam believes the structure of the CEE business made it the most straightforward asset to sell.

“CEE first, Italy next? By virtue of the structured put/call options between Entain and EMMA Capital, and the more standalone nature of the CEE business, it naturally became the easiest part of Entain to divest.

“In our view, Entain’s Italian assets would be highly coveted by both financial and strategic buyers. An Italian divestment would represent the next leg of the ongoing consolidation of the online gambling market in Italy. We see potential for a further £1.2-1.6bn of capital to be unlocked, once again at similarly attractive multiples (8-9x).”

Potential Italy Sale Could Accelerate Debt Reduction Strategy

Tam noted that Entain holds around 8% of the Italian online gambling market through its Eurobet and Gioco Digitale brands. While the company remains one of Italy’s leading operators, it trails larger rivals including Lottomatica and Flutter.

According to the analysis, completing both the CEE transaction and a future Italian sale could reduce Entain’s net debt to roughly £1.5 billion. Debt levels would decline further after the company completes payments linked to its £219 million deferred prosecution agreement in the UK.

Entain Could Increase Focus On BetMGM Value

Tam believes a leaner business would allow investors to place more value on Entain’s 50% stake in BetMGM.

“BetMGM remains the main prize within Entain,” he added. “An ongoing divestment programme would unlock significant capital and cut Entain’s leverage to the bottom end of management’s targeted 2-3x range earlier than expected.

“With BetMGM a bigger portion of the remaining Entain portfolio, investors are more likely to ascribe value to it. Meanwhile, a smaller and less complex Entain is equally more digestible.”