Ladbrokes and Sportingbet owner Entain PLC (LSE:ENT) has appointed a director from one of the four activist funds that have built up stakes in it.
The blue-chip bookmaker, which had a tumultuous 2023 that ended with a £585 million bribery fine and the departure of its chief executive, has appointed Ricky Sandler, founder and boss of New York hedge fund Eminence Capital, as a non-executive director with immediate effect.
Sandler is being made a member of the FTSE 100 company's capital allocation committee and its people & governance committee, with the latter allowing him to work on identifying an additional non-executive director "mutually agreeable to Eminence and the company", it said.
Shares in the company rose 2.5% to 1,010p in early trading on Wednesday.
Chairman Barry Gibson hailed Sandler's "deep knowledge of our business and a firm belief in the quality of our operations and substantial growth opportunities".
Sandler said: "Entain is a robust business with market-leading brands, a unique technology platform, and enviable positions in key geographies around the world. I look forward to working with my fellow directors to help Entain achieve long-term success and create lasting value for its shareholders."
Eminence, along with other activist investors Sachem Head Capital Management, Dendur Capital and Corvex, have been pushing to take board seats with the aim of controlling the hiring process for the new chief executive and any future mergers and acquisitions, according to an FT report last month.
After building a 2.1% stake, Eminence was the first to go public with its grievances in June, when it revealed that it has engaged in conversation with board for "the last several years" but had been disappointed with recent M&A strategy, most notably funding the purchase of STS Holdings by issuing shares representing around 8% of its market cap.
As the Entain board previously rejected takeover approaches from MGM and DraftKings at materially higher prices on the grounds that they undervalued the company, "to then turn around and issue equity at depressed prices for an asset that is at best a 'nice to have' is illogical".
Entain said in its statement today that it has entered into a "relationship agreement" with Eminence and Sandler, which includes "customary governance, standstill and voting provisions" and has been made available on the group's website.
It states that the intention it to appoint Sandler for a three-year term and that he will not be entitled to be appointed as a member of the audit or remuneration committees as he is regarded as non-independent for the purposes of the UK Corporate Governance Code.
His employment will be terminated if Eminence sells its stake, if the hedge fund and/or its affiliates acquire a shareholding of 8% or more in a competing business and become a director there; along with several other clauses.