The board of Evolution Gaming has advised its shareholders to decline the mandatory cash offer from Candle Lake Limited, asserting that the proposed SEK 695 per share ($73) does not accurately represent the company's true market value.
Candle Lake, an investment firm owned by billionaire Kenneth Dart, initiated the offer on August 13 after surpassing Sweden's 30% mandatory takeover threshold in July. Currently, Candle Lake holds around 31.56% of Evolution’s shares and voting rights.
In its evaluation, Evolution's board considered various factors, including the current share price, the company's strategic and financial standing, as well as anticipated future growth. They concluded that the offer, given its discount compared to the current share price, fails to reflect Evolution's fair market value.
As of now, Evolution's shares are trading nearly 20% higher than Candle Lake's offer, with prices around SEK 833. This increase follows a notable rise in share value, as the stock was priced at SEK 737.2 the day before the offer was made.
The financial performance of Evolution also supports the board's stance, with the company reporting net revenues of €517.8 million, a slight decline of 1.2% year-on-year but a 2.4% increase when adjusted for constant currency. Additionally, EBITDA reached €341 million, reflecting a robust margin of 65.9%, while the company executed a share buyback program worth €2 billion, repurchasing approximately €303 million of shares during the quarter.
Candle Lake, which acquired an additional 2.05 million shares on July 24, clarified that its objective is not to take full control of Evolution. The firm views its investment as a long-term financial commitment to a well-managed and profitable enterprise. It does not intend to make significant changes to Evolution's operations, management, or workforce.
The acceptance period for the offer will last until September 15, with settlement anticipated around September 23. Should Candle Lake achieve over 90% ownership, it plans to enforce compulsory redemption of the remaining shares and aims to delist Evolution from Nasdaq Stockholm.