Entain prepares for FTSE 250 move as breakup value draws focus

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Entain prepares for FTSE 250 move

Highlights

Entain shares fall about two-fifths year-on-year, triggering its move from FTSE 100 to FTSE 250 on September 21 amid increased liabilities and governance pressure.
Entain's net debt doubles to £3.6 billion, and it reaches a £585 million UK settlement while CEO Stella David announces a partial sale of its Polish and Croatian assets for up to £366 million.
Berenberg analysts estimate Entain's sum-of-the-parts valuation at £12 per share—over double its market price—potentially inviting renewed takeover interest or further disposals.

Portfolio reshaping ahead of index exit

As reported by Financial Times, Entain is due to move to the FTSE 250 when the index reshuffle takes effect on September 21, after its shares fall by about two-fifths over the past year. The decline marks a sharp reversal from 2021, when the company's exposure to the U.S. sports betting market helps attract a £16 billion takeover approach from DraftKings.

Since then, Entain has expanded through acquisitions while also taking on heavier liabilities and governance strain. Net debt has doubled to £3.6 billion, the group has faced pressure from activist shareholders, and it reaches a £585 million settlement with UK authorities over historical bribery allegations in Turkey.

The company also goes through four chief executives during that period, excluding two interim stints by current CEO Stella David. In June, David announces the sale of a 20% stake in Entain's Polish and Croatian business for up to £366 million and says the group intends to divest the remaining 48% at a later stage, prompting wider speculation over further disposals or spin-offs.

Broader operations and valuation upside

Despite the turbulence, Entain now operates across lotteries, casino games, horseracing, other sports betting, gaming machines and bingo in about 30 jurisdictions, up from 20 in 2019. Online gambling contributes about three-quarters of revenue, compared with roughly three-fifths before, while the number of betting shops has more than halved to 2,300.

Ebitda last year stands about two-thirds above 2019 levels, suggesting the group exits the blue-chip index with a larger and more digitally weighted business. At the same time, regulatory risk remains significant, with the UK government's higher online gaming duties leading Entain last year to book a £488 million impairment charge.

BetMGM, Entain's U.S. sportsbook joint venture, remains a potential growth engine, but regulation of prediction markets is still contested between state and federal authorities. Berenberg analysts say a sum-of-the-parts valuation implies Entain is worth £12 per share, more than double its current market price, a gap that could strengthen interest from rivals or support further portfolio simplification.

Our earlier report on the September quarterly review of the FTSE UK index series outlined the upcoming changes to FTSE 100 and FTSE 250 membership. It noted that Entain is set to drop out of the FTSE 100 and join the FTSE 250 when the reshuffle takes effect on September 21, alongside a wider set of additions and removals across both indexes.

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