Entain Plc, previously GVC Holdings, is not one to let the grass grow under their feet when there is a deal to be made. Despite being under offer by MGM Resorts themselves, an £8.09 billion offer the Board dismissed as undervalue, Entain is in the process of acquiring a Swedish competitor, Enlabs AB.
CEO of Entain, Shay Segev, said:
"The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets. We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities.”
If Entain’s rejection of the MGM Resorts offer and this aggressive push to acquire a Baltic competitor in order to “turbocharge growth” is any indication of how they will continue to operate throughout 2021 they are going to be the company to watch this year.
Cash Is Still King
Entain has offered to purchase Enlabs, owner of such brands as Opitbet casino, Laimz casino and Ninja casino, for just over €277 million. The offer is also a straight cash deal, which given that the Independent Bid Committee of Enlabs has unanimously recommended acceptance of the offer proves the old adage that cash is indeed king.
There is good reason for the Board and Enlabs shareholders to jump at the offer. The deal offers stakeholders SEK 40 (€3.90) per share, that is a premium of 42.3% based on the company’s average stock valuation of SEK 28.12 (€2.79).
The highlights of the offer are as follows:
- An offer of SEK 40 per unit has been made for 69.9 million Enlabs shares.
- The total offer is valued at approximately SEK 2.8 billion.
- The offer represents a share premium of 42.2%.
- The deal is a cash sale only, no shares in the merged company are on offer.
- The acceptance period of the offer began 21 January 2021 and expires 18 February 2021.
Based on the deal being a company buyout, using share values as a valuation metric, any shareholders surrendering their stake in Enlabs will not be responsible for commission fees as they would have the sale of their shares been done on the open market.
The Fine Print
While the Enlabs board of directors is in favour of the deal the, aside for the regular judicial approvals, the one sticking point in the process can the shareholders themselves.
Fulfilment of the €277 million offer requires that at the completion of the sale Entain holds a 90% or greater share in the company. While this sounds perfectly reasonable the shareholders currently own 42.2% of Enlabs, broken down as follows:
- Erlinghundra AB - 19.7%
- Atletico Nordic B.V. - 16.1%
- Anders Tangen - 3.5%
- Filip Andersson - 2.0%
- TNGN Invest AB - 0.4%
- Jan Ove Tangen - 0.4%
- Norrlandet Invest AB - 0.1%
This puts a lot of power to derail the deal, or play hardball on price, in the hands of either Erlinghundra AB or Atletico Nordic. However, with these shareholders looking to pocket a commission-free €55 million and €44.7 million respectively the likelihood of them holding proceedings is slim.