There’s an unwritten rule in the world of chief executives that you don’t jump ship after six months in post just because another company has made you a megabucks pay offer. And you definitely don’t resign as boss of a FTSE 100 company in the middle of a takeover battle.
Shay Segev at Entain, owner of Ladbrokes and Coral, doesn’t seem to have got the memo. He’s off to DAZN, a sports streaming platform backed by billionaire Sir Len Blavatnik that is prepared to throw big bucks at senior recruits in its attempt to become “the Netflix of sport”. “We cannot match the rewards he has been offered,” says the Entain chairman, Barry Gibson.
Entain’s board and 25,000 staff are entitled to be furious. Segev was an internal promotion last July and billed as a tech supremo who would also make Entain respectable after the free-wheeling years under founder Kenny Alexander. He outlined his strategy of “sustainability, growth and innovation”, plus a change of corporate name from GVC, as recently as November. The haste to embrace Blavatnik’s zillions is indecent.
Entain will – rightly – hold Segev to his six-month notice period and cancel his crop of unvested performance shares, worth a potential £9.6m at the current share price (a clue to quite how much DAZN must be offering). Of more importance is the effect on the takeover battle with MGM Resorts, whose £8.1bn bid Entain rejected only last week – a rejection Segev says he fully supports.
On one hand, MGM itself might be slightly unnerved by the resignation. It is more likely, however, that the bidder will use it to portray Entain as a rudderless organisation whose bosses suspect the company’s days of independence are numbered. In reality, Entain’s board should continue to resist anything but a truly over-the-top offer from MGM, but Segev’s rush to the exit doesn’t make the task easier.
One could take the view that it’s naive or old-fashioned to expect loyalty from hired-hand chief executives. But there are limits: you don’t jump while you are supposed to be leading a takeover defence.
Dr Martens flotation: the shine is likely to come off
It was a shoo-in that Dr Martens would sprinkle the words “iconic” and “icon” across its announcement of a plan to float on the London Stock Exchange. Sure enough, there were nine mentions in the first four pages. Everyone loves a tale of “brand heritage”. It will be a disappointment if a photo of The Who’s Pete Townshend in booted-up mode does not adorn the prospectus.
But the other iconic brand on display is that of the seller, Permira, the private equity firm. The fame in its case lies in its history of shunting on to the stock market over-indebted British companies that subsequently plunge in value. The mugs who bought shares in the AA and Saga at flotation are still counting the cost.
Dr Martens looks a superior operation, it should be said. For starters, Permira hasn’t cranked up its borrowings to nose-bleed levels. Growth is also easier to spot. The business sold 6.9m pairs of Docs in the year to March 2018 but 11.1m in its most recent financial year, when top-line profits were £184m.
Even so, Permira is hoping to sell for £3bn-plus, if the pricing whisper is correct, having bought Dr Martens from family ownership for a mere £300m in 2014. No doubt the operation has been made slicker in that time, but a tenfold gain in seven years is going some.
Think of the potential in China, runs one version of the sales pitch. OK, but the point about the Dr Martens brand appeal, surely, is that not everyone wears it. Some scepticism on pricing is required.
Don’t bet on digital currencies
Timely advice from Financial Conduct Authority: be prepared to lose all your money if you invest in investment schemes tied to digital currencies. On cue, bitcoin produced another example of price silliness. You could have lost 25% by getting your timing wrong in the last couple of days.
Regulators seem mostly concerned about unregulated firms pushing implausible promises of sky-high returns. Quite right too. The wild marketing around bitcoin and its imitators is the surest sign the crypto craze is speculation on stilts.
It’s worth saying time and again: you almost certainly won’t be covered by the Financial Services Compensation Scheme if you lose your shirt. Nor would you deserve a penny of recompense.