Entain Plc has set aside £585 million ($745 million) for a possible settlement with UK authorities following an investigation into potential bribery offenses at its former Turkish business.
(Bloomberg) — Entain Plc has set aside £585 million ($745 million) for a possible settlement with UK authorities following an investigation into potential bribery offenses at its former Turkish business.
The sum would be paid over four years relating to alleged offenses under section 7 of the Bribery Act 2010, which holds businesses liable for failure to prevent bribery, Entain said Thursday. The number was larger than some analysts had anticipated.
Shares of Entain were down 1.7% to 1,335 pence in London.
“It’s a super historical issue — it relates to the previous management team, and a business that was sold nearly six years ago,” Chief Financial Officer Rob Wood said in an interview. “Being the leading responsible operator globally has been an ambition that we set ourselves a good three, four years ago, and we’re fulfilling on it. None of the existing leadership has any connection.”
The gambling group, formerly known as GVC, and which owns the Ladbrokes brand, said it’s likely to be able to reach a resolution with the UK’s Crown Prosecution Service, pending judicial approval of a deferred prosecution agreement in the fourth quarter. It added it’s reviewed its anti-bribery policies and strengthened compliance procedures.
Turkey was a substantial part of GVC’s business — larger than the UK and worth €100 million ($110 million) in revenue as of its 2016 annual report — before it was sold and the company acquired Ladbrokes Coral in 2018.
Entain also announced first half results that slightly beat expectations on Thursday. Earnings before interest, tax, depreciation and amortization were £499 million versus an average estimate of £492 million according to analysts surveyed by Bloomberg. Net gaming revenue was £2.4 billion versus an average estimate of £2.33 billion.
Late last month Entain’s fast-growing US joint venture BetMGM said it achieved profitability in the second quarter and it expects to become self-sustaining in the second half of the year. Citi analysts said its JV partner MGM Resorts International could make another takeover bid for Entain.
“Despite the quantum of the settlement, it will be positive to have the overhang removed,” Goodbody analyst David Brohan wrote in a note to clients, adding that the group’s results were “a mixed bag.”
(Updates with CFO interview and shares.)
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