Evolution has a decision to made after Candle Lake bid

Kenneth Dart’s investment vehicle Candle Lake has launched a mandatory cash offer to acquire all outstanding shares in Evolution at SEK695 per share.

The offer, which was triggered after Dart’s holding in the live casino technology provider exceeded 30%, values the group at approximately SEK131.7bn (£10.21bn).

Candle Lake now holds or controls 31.56% of the Stockholm-listed firm, with additional exposure through cash-settled total return swaps taking its overall financial exposure to 32.04%.

Dart “not motivated” by full Evolution takeover

However, the offer is fairly tame, and it doesn’t look as though Dart has any interest in a takeover of the fourth-largest publicly-listed gambling group. 

The SEK695 per-share bid represents a discount of around 5.7% compared to the closing share price of SEK737.2 on 12 August, which was the last day before the offer was made. 

A company statement made clear the intention, or lack thereof, behind the forced bid. 

“Candle Lake is a long-term investor and views its shareholding in Evolution as a financial investment in a well-managed, highly profitable business,” it read.

“Evolution has, since its founding in 2006, developed into the global market leader in B2B live casino solutions, and Candle Lake recognises the quality of Evolution’s management and the strength of its operational platform. The offer is, however, not motivated by any intention to acquire all outstanding shares in Evolution.

“Candle Lake’s plans for the future business and general strategy of Evolution, as described above, do not currently include any material changes with regard to Evolution’s future operations. 

“The offer will not affect Candle Lake’s operations. Candle Lake also has no plans to implement any material changes with regard to Evolution’s operational sites, or Evolution’s and Candle Lake’s management and employees, including their terms of employment.”

The offer values the shares not already owned or controlled by Candle Lake at approximately SEK 90.1 billion, with the document expected on 14 August and the acceptance period scheduled to run from 17 August-15 September. 

Settlement is expected to begin on 23 September, though it shouldn’t take mass debate for the outcome of a rejection. 

If Candle Lake ultimately acquires more than 90% of the business – a mark it is currently way off – it intends to initiate compulsory redemption proceedings for the remaining shares and seek to delist Evolution from Nasdaq Stockholm.

A similar situation may arise with Candle Lake and Flutter Entertainment, should Dart continue to place many of his other chips on that company. 

Dart now holds a stake of around 29% in the Sky Bet, Paddy Power, Betfair and FanDuel owner, and should the 30% threshold be crossed, an event akin to this saga will occur given that Flutter is subject to Irish Takeover Rules. 

However, the lowball offer presented yesterday would suggest that Dart has no interest in a full takeover of either of the gambling multinationals.

Evolution shares have increased by just under SEK10 to SEK747.4 since the close of play yesterday, though no investor should be satisfied with the offer nor confident that it will be accepted.