Second Activist Investor Reveals Increased 888 Holdings Stake

888 Holdings could soon undergo a significant shake-up after activist investor HG Vora Capital Management disclosed that it had upped its shareholding in the global online gambling operator to a weighty 5.5%.

London-listed 888 Holdings is responsible for the 888casino, 888sport and 888poker iGaming brands but increased this portfolio even further last summer via its $2.5 billion (€2.3 billion) debt-fuelled acquisition of fierce rival William Hill.

Buyer Blues

However, this purchase has yet to bear fruit while costs and compliance failures associated with the transaction recently led Gibraltar-headquartered 888 Holdings to disclose a pre-tax loss of approximately $148.4 million (€135.5 million) for the 12 months to the end of December.

HG Vora Capital Management has a history of pushing for change at gambling companies including via previous investments in American operators Penn National Gaming Incorporated and Pinnacle Entertainment Incorporated before this duo’s $2.8 billion merger in 2018. 

The New York-based financier moreover held a 5% stake in William Hill just two weeks before this operator’s 2020 purchase by Caesars Entertainment Incorporated.

Guidance Gap

January saw 888 Holdings dismiss its Chief Executive Officer, Itai Pazner, at the same time as divulging it had frozen some $64 million (€58.5 million) in customer accounts due to anti-money laundering failings. 

These have since been reinstated, although the operator is currently being run on an interim basis by its Chair, Lord Jon Mendelsohn, as the search for a new boss continues.

HG Vora Capital Management is known to be in favour of a plan earlier floated by fellow 888 Holdings shareholder FS Gaming Investments that would see respected industry professionals Kenneth Alexander and Stephen Morana permanently appointed to lead the iGaming firm.

Enlightened Experience

Alexander ran gambling behemoth GVC Holdings – who specialise in sports betting and casino sites - for 13 years until 2020, while Morana served the same company as an independent director. 

Both men joined with former co-workers Shay Segev and Lee Feldman so as to establish activist FS Gaming Investments and acquire an influential 6.5% stake in 888 Holdings.

FS Gaming Investments, which moreover counts American investment bank B Riley Financial Incorporated among its backers, furthermore wants 888 Holdings to speed up its William Hill integration activities so as to drive down costs and get to grips with its around $2 billion debt pile.

Market Optimism

The revelation that HG Vora Capital Management now holds an enhanced stake in 888 Holdings pushed the latter firm’s share price up by almost 6% to $1.51 (€1.38) earlier this week, which was more than 50% better than where it stood prior to the June 7 revelation that FS Gaming Investments had upped its own shareholding.

“The board remains highly confident in its long-term strategy to maximise value for shareholders,” read a statement from FS Gaming Investments. 

“We look forward to updating and engaging with all our shareholders as we continue to deliver against our clear strategic and operational priorities.”