The Board of Directors at 888 Holdings confirmed that it had completed all ongoing negotiations with FS Gaming Investments LLC.
FS Gaming Investments LLC is an investment firm owned by the former GVC Holdings (formerly Entain Plc) executives Kenneth Alexander (CEO) and Lee Feldman (Chairman). Last month, they acquired a 6.5% stake in LSE Gambling Group.
Alexander and Feldman invited 888 management to take part in the restructuring of the business, whose shares fell after the acquisition of William Hill last year. FS Gaming has proposed the appointment of Lee Feldman, Kenny Alexander and Stephen Moran as Chairman, CEO and CFO respectively at 888.
However, 888 confirmed that the UK Gambling Commission had expressed concerns about HMRC’s ongoing investigation into GVC’s former Turkish subsidiary Headlong. The investigation has not yet been completed, but Entain’s management believes that a “substantial financial penalty” may be imposed, the specific amount of which has not yet been determined.
The HMRC investigation relates to the GVC cases in Turkey and is directly related to the candidates proposed by FS Gaming for senior positions.
As a result of this, the UKGC has taken the decision to revise 888’s operating licences as concerns were raised and a “lack of adequate guarantees on the part of FS Gaming” was noted.
The UKGC has warned that 888 Holdings’ licence could be subject to the most stringent possible action, including immediate suspension, revocation of operating licences, imposition of licence conditions or financial sanctions.
As a result, 888’s board of directors has decided to end negotiations with FS Gaming due to the risk of a licence renegotiation for operations and the potential loss of 888’s UK revenue.
888 informed its investors about the factors and decisions described by the Gambling Commission in relation to corporate governance and investment management.
The Commission indicated that the acquisition of more than 10% of the company’s shares is considered a change in corporate control and requires its approval. If such a change is not approved, the only remedy will be the revocation of the licence, and this decision cannot be reversed after it has become effective.
The Board was also informed that “any licence applicant or operator relevant to such application should consider what role relevant individuals may have had at the time relevant to the ongoing HMRC investigation into GVC.”
Lord Mendelsohn, Executive Chairman of 888, expressed his position, commenting on the current events: “We will be fully cooperating with the GBGC’s Section 116 (2)(c)(ii) review, arising from potential issues with respect to FS Gaming’s investment and Proposal, and look forward to bringing the review to a conclusion expeditiously.
As a Board, we devoted significant time to considering FS Gaming’s Proposal. However, following in-depth regulatory due diligence, including engaging closely with the GBGC, the Board had no option but to terminate discussions as it simply could not put licences in our largest market at significant risk.
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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