Kenny Alexander Investment under Scrutiny as 888 Shares Plummet

Posted on: July 14, 2023, 02:53h. 

Last updated on: July 14, 2023, 02:53h.

Shares of 888 Holdings Plc (OTC: EIHDF) plummeted on Friday following a warning that the company’s UK license could be in jeopardy due to an investment by a firm controlled by Kenny Alexander.

FS Gaming
A William Hill shop in the UK. Parent company 888 halted talks with Kenny Alexander’s FS Gaming amid regulatory scrutiny. (Image: The Times)

Recently, FS Gaming Investments, led by Alexander, acquired a 6.57% stake in 888. While some investors saw this as a potential turnaround opportunity, concerns have been raised by regulators, particularly due to Alexander’s history with divesting a Turkish business while at GVC.

Regulators are now examining Alexander’s involvement with 888, which poses financial risks and the potential loss of the company’s UK permit. The Great Britain Gaming Commission (GBGC) is closely scrutinizing the situation.

Additionally, Entain, the parent company of GVC (now known as Entain Plc), is facing a bribery investigation by Her Majesty’s Revenue and Customs (HMRC) related to its previous operations in Turkey. This scrutiny has implications for 888 as well.

Efforts to Address Regulators’ Concerns

Following the investment announcement, FS Gaming presented a plan to 888’s board, proposing that Alexander become the CEO, Stephen Morana become the finance director, and former GVC Chairman Lee Feldman replace 888 Executive Chairman Jonathan Mendelsohn.

While discussions took place, 888 ultimately decided to discontinue talks with FS in order to cooperate with the GBGC and mitigate potential fines in order to protect its UK license.

According to an 888 statement, “The GBGC has expressed its concern regarding the ongoing HMRC investigation into GVC’s activities covering the time the individuals proposed to the Board by FS Gaming were in senior leadership positions at GVC, and that it is in close dialogue with HMRC regarding its ongoing investigation. The GBGC requested regular updates from 888 in relation to any new developments in the circumstances around FS Gaming and its Proposal so that it can fully execute its responsibilities as the GB regulator.”

With the UK and Ireland accounting for a significant portion of 888’s earnings, the company has a strong incentive to cooperate with the GBGC. This region contributed to 60% of the operator’s 2022 pro-forma EBITDA.

Future Steps for 888

888 has ended discussions with FS, and it is expected that Alexander’s group will announce their withdrawal from seeking board seats at the company. This move aims to appease regulators and reassure nervous investors.

In the near future, the parent company of William Hill will resume its search for a new CEO and focus on expanding its market share.

Jonathan Mendelsohn, 888 Executive Chairman, stated, “While this engagement temporarily interrupted the very thorough search process to appoint a new CEO, the Board is finalising its appointment and expects to make an announcement in the very near future. The Board remains firmly focused on delivering the Group’s clear strategy to unlock shareholder value and I’m pleased to confirm that the business remains on track to deliver market expectations for 2023 Adjusted EBITDA.”

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