Entain Go All-In with €365m Cash Bid to Acquire Enlabs

Earlier this year Entain, previously GVC Holdings, found themselves in a takeover-triangle when they placed a €277 million bid to acquire Baltic competitor Enlabs, while they themselves were under offer by MGM Resorts.

In a surprising turn of events, the shareholders of Enlabs voted to reject the offer claiming they felt it undervalued the company and was not representative of its status as a market leader in the Baltic region.

The push to reject a stock valuation of SEK 40 per share was led by US investor Alt Fox, who claimed they believed an offer that set the value at closer to SEK 55 per share was a realistic evaluation of the company’s current standing and potential.

Entain Take the Bait

While many industry pundits expected Entain to increase their bid slightly, the proposed SEK 55 felt like a bit of a stretch on Alt Fox’s part. Whether they were gambling or not is irrelevant as Entain CFO, Rob Wood, confirmed an offer of SEK 53 per share this morning via an official press release:

“Entain is able to provide the scale and platform needed to further support Enlabs’ long-term growth, and we firmly believe that Entain will be the best home for Enlabs, its employees and customers. Against this background, we have decided to make a final offer of SEK 53 to all shareholders, providing an opportunity to exit their investment at a very attractive valuation.”

This offer places a value of SEK 3.7 billion (€365 million) on Enlabs, and represents the following premium on the company’s Nasdaq First North prices:

• The last 180 trading days prior to the offer: +88.5%
• The last 90 trading days prior to the offer: +53.1%
• The last trading day prior to the offer: +34.0%

Despite being open for negotiation to this point Entain officially stated that they are not willing to negotiate another price increase noting this latest offer is “final and will not be increased by Entain”.

Investors Not Pushing Their Luck

While Alta Fox and other US investors may have rejected an offer previously which was considered by most pundits to be a done deal, they are not trying their luck a second time.

The top five shareholders in Enlabs (Hans Isoz, Jimmy Jönsson, Topline Capital, Ludwig Pettersson and Giwdul Invest AB) represent a combined 51% of the total number of Enlabs shares and have “irrevocably agreed to accept the offer”. The remaining shareholders have until 17 May 2021 to submit their approval, which with the majority shareholders in agreement is a mere formality.