Entain PLC has revised their offer in the middle of their takeover bid for Enlabs AB. They have increased the offer from SEK 40 per share to SEK 53. This would value the company at SEK 3.7bn. In real world cash this means that Entain has proposed a new €365 million deal valuation to Enlabs shareholders.
The new valuation
This new valuation by Entain looks to be the final move in their takeover attempt and they will not be changing the valuation any further. They announced that this number is “final and will not be increased”. After a contentious takeover attempt, shareholders representing the majority of Enlabs have now backed the improved offer.
The original offer
The original offer of €280 million cash was approved by company chairman Niklas Braathe but it split Enlab shareholders. A minority group of shareholders led by hedge fund Alta Fox rejected the bid. They believed that the bid was “unsatisfactory and undervaluing” the firm’s leading market position within the Baltic region. They wanted the shares to be valued at SEK 55 which would have valued the company at €390 million.
While the new bid does not match the desired SEK 55 per share target price that was put forward by the minority shareholders, Entain believes that the deal will be executed and that 51% of the shareholders “have irrevocably agreed to accept the offer and would urge other shareholders to do the same by 18 March”.
Now that the acceptance period has been increased from the 18th of February until the 18th of March and 51% of the shareholders have agreed to the takeover, it is all but certain that the bid will go through successfully.
Comment from the group CFO
Group CFO and Deputy leader Rob Wood confirmed Entain’s new SEK 53 cash offer proposal in a recent transaction statement from Entain:
“In a highly competitive and regulated industry, where consolidation is a key theme, Entain is able to provide the scale and platform needed to further support Enlabs’ long-term growth.”
“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.”
“We are pleased that shareholders with around 51% have now irrevocably agreed to accept the offer and would urge other shareholders to do the same by 18 March.”
The future of the bid
The Enlabs independent bid committee informed Entain that they would be recommending their shareholders to accept the increased offer. If it goes through successfully, the formal statement will be announced no later than one week prior to the expiry of the acceptance period.
Enlabs believe that this move is the best way to remain viable and reaffirmed their previous stance that the company should pursue a combination with Entain as the best-placed outcome.