A collection of Enlabs investors who hold a smaller stake in the company have turned down Entain’s bid to take over the business, claiming it is “significantly undervalued.”
Entain has encountered a hurdle in its attempt to acquire Enlabs, the operator of Optibet, as some Enlabs investors have dismissed the offer, asserting that it “significantly undervalues” the company.
A group of Enlabs shareholders who hold a minority stake in the company have rejected Entain’s “inadequate” proposal to take over the business.
Entain, formerly known as GVC Holdings, a company that operates online gambling services, made an offer earlier this month to acquire Enlabs for £250 million (€281.1 million/$339.4 million).
The cash offer was endorsed by the Enlabs board and equates to a deal of SEK 40 per share. Shareholders who own 42.2% of Enlabs have also committed to accepting the offer.
However, Alta Fox Capital Management, which currently owns 2,332,625 shares (3.34% of the company’s total share capital) in Enlabs, has stated that they do not intend to sell any shares at the current price.
Alta Fox has indicated that they have the backing of other minority shareholders, including Topline Capital, which holds 2.44% of the operator.
Alta Fox has stated that private investors Hans Isoz, Jimmy Jonsson and Ludwig Pettersson, who hold 2.58%, 1.71% and 0.63% of Enlabs respectively, are also opposed to the proposal.
“The offer significantly undervalues the company and represents a meager 1% premium.”
Alta Fox asserts that Entain’s proposed takeover bid is merely a small portion of Enlabs’ pre-agreement stock value and that certain inconsistencies raise concerns about why Enlabs Chairman Niklas Braathen accepted such an unfair offer.
Alta Fox highlights that Entain intends to employ Braathen as a senior executive following the transaction, while Entain’s CEO has just declared his departure, which is highly unusual. This leads to the conclusion that while this deal might be a good bargain for Entain, it’s a poor deal for Enlabs’ minority investors.
Alta Fox has engaged legal counsel and proposed an alternative, demanding that Entain acquire Enlabs for 55 Swedish Krona per share, which would value Enlabs at roughly £337.6 million.
The investor added that if Entain is unwilling to meet this price, Enlabs should remain independent.
Alta Fox stated: “Alta Fox is confident that we have the backing to prevent minority shareholders from being squeezed out, have legal counsel to ensure their fair treatment under Swedish law, and are committed to securing a fair price that reflects Enlabs’ independent growth prospects.”
At the time of this writing, Enlabs’ share price is 43.2 Swedish Krona per share.
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