In light of the recent exit of CEO Jette Nygaard-Andersen and heightened activity in the stock by activist shareholders, it may be the right moment for Entain Plc (OTC: GMVHF) to contemplate significant measures. 

That's the perspective of Jefferies analyst James Wheatcroft. In a recent report to clients, he upgraded the depressed shares of the Ladbrokes parent to “buy” from “hold,” indicating that several options might be available for the gaming firm.

"We would expect other options to include the sale of Entain to MGM, the sale of the BetMGM stake, the sale of other assets, in addition to finding a suitable CEO … Several factors now imply an opportune moment for MGM to re-evaluate an approach to Entain,” wrote Wheatcroft.

Discussions regarding MGM Resorts International (NYSE: MGM) making another bid for its BetMGM partner emerged almost three years after the Bellagio operator offered $11.06 billion in cash and stock for Entain. The British bookmaker stated that the proposal was insufficient. In the almost three years since that proposal, MGM hasn't publicly presented another offer, and Entain's market value has dropped to $7.89 billion. 

Reasons Behind Jefferies Analyst's Optimistic View on Entain 

Wheatcroft recognized that the possibility of significant transactions — whether it involves the sale of Entain’s 50% stake in BetMGM or a complete sale of the company — might obstruct the process of finding a new CEO. He continues to view short odds “for a highly credible CEO to join Entain.” 

The anticipated appointment of Ricky Sandler, founder of Eminence Capital, to the gaming company's board of directors could assist in that pursuit. Additional activist investors urged Entain to include Sandler in the board and assign him a significant position in addressing other director openings. He may have a significant influence in choosing the CEO. 

Wheatcroft also pointed out that Keith Meister’s Corvex Management has recently declared a 4.4% stake in Entain, which could serve as a potential catalyst for dealmaking. Meister is not a candidate for a seat on the Entain board because of possible conflicts of interest. 

Nonetheless, Wheatcroft’s reasoning holds weight, as Meister serves as a director at MGM and his hedge fund possesses 2% of the casino giant’s outstanding shares. This indicates that he would probably benefit if MGM completely purchases Entain or takes total control of BetMGM. 

Trust it When It Occurs 

Considering the executive turmoil and rising interest in Entain from activist investors, it seems like a suitable moment for MGM to take action. However, conjecture of this kind is now outdated by the benchmarks of financial markets. 

On the other hand, MGM executives have been unwavering regarding two issues. Initially, they would greatly appreciate having complete control over BetMGM. Secondly, another complete acquisition offer for Entain is not expected in the short term. At a minimum, that’s the claim being made publicly. 

Nonetheless, as Wheatcroft highlighted, Entain shares are presently affordable, and this is true even when considering the recent wave of stories suggesting the firm might be a takeover candidate.