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(Sharecast News) - Ladbrokes-owner Entain is mulling a possible sale of its central and eastern Europe operations, it was reported on Friday.
According to Reuters, citing unnamed sources familiar with the matter, the gambling and gaming group is mulling a possible sale to joint venture partners Emma Capital, the Czech investment firm.
The partnership, which was struck in 2022 when the two firms acquired Croatian business Supersport, includes a call-and-put option over Emma's stake, exercisable from the third anniversary of completion. Entain is the majority owner of the venture, which also includes Poland's STS.
The review has been prompted by a desire to cut costs following a hike in online gambling taxes in the UK. Its shares have fallen around 30% since November, when the new taxes were first announced in the Budget. It also has significant debts of around 3.6bn.
Entain declined to comment on the report, while Emma said it would neither confirm nor deny any talks. The sources also told Reuters that discussions were in early stages and there was no guarantee a deal would be struck.
Shares in Entain initially nudged higher, but by 1130 BST gains had been pared back and the FTSE 250 stock was largely flat at 551.4p.
Entain, which also a 50:50 US joint venture with MGM Resorts, posted group underlying earnings before interest, tax, depreciation and amortisation of 1.16bn for the year to 31 December in March, on net gaming revenues of 5.3bn. Net debt stood at 3.6bn.
The central and eastern Europe business generated EBITDA of 183.7m.
At the time, the company said its "global scale, diversity and strong UK market position" left it "well placed to navigate regulatory and tax changes". It is currently forecasting NGR to grow by 5% to 7% in the current year, and EBITDA of 1.3bn, excluding BetMGM parent fees.
Dan Coatsworth, head of markets at AJ Bell, said: "Entain is under significant pressure to do something about the extra costs triggered by hikes to online gambling taxes, something that has also depressed its share price.
"There is logic to the deal - the company's overseas focus is directed towards the increasingly lucrative US market."