ENTAIN’S ENLABS AMBITIONS HIT SNAG AS MAJOR SHAREHOLDER REJECTS OFFER

Entain’s planned acquisition of Baltics-focused gambling operator Enlabs has hit a snag, with a major US shareholder rejecting the offer. 

According to Texas-based hedge fund Alta Fox Capital Management, which owns 3.3% of Enlabs, Entain’s offer of SEK 40 (£3.50 GBP) per share, which is worth some £250M GBP, materially undervalues the company.

The hedge fund says it has the support of “more than 10%” of Enlabs investors, who intend to reject Entain’s recommended offer. Alta Fox has has said that it believes Enlabs shareholders must be better compensated, citing the company’s “excellent growth prospects”, and has suggested a price of 55 SEK per share. 

Furthermore, Alta Fox has expressed concern at the terms of the deal, including “unusual circumstances”, and the fact that Enlab’s chairman, Niklas Braathen had been guaranteed an executive position post-deal. Braathen is the largest single shareholder in Enlabs, with his private investment firm, Erlinghundra AB owning 19.5% equity. Enlabs was formed in 2007 when RedBet Gaming acquired Baltic Gaming Group, which Braathen founded, hence his large shareholding.

Enlabs operates brands including Optibet and NinjaCasino and has a strong presence in the Baltic markets of Latvia, Estonia, and Lithuania. It is expected to generate net gaming revenues of approximately €89.5M and EBITDA of €23.5M in the year ending 31 December 2021. 

As previously reported, Entain itself is currently considering a proposed $11B USD acquisition by MGM Resorts International, though the company has said that offer “significantly” undervalues it.

AYO.NEWS says:

With both Alta Fox claiming Entain is significantly undervaluing Enlabs, and Entain itself claiming MGM Resorts is significantly undervaluing it, you could be forgiven for wondering if current shareholders are actually significantly overvaluing their current portfolios? 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

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