Entain outlines £250m offer to acquire Enlabs

The online gambling company Entain has made a “recommended offer” to acquire the Optibet operator, Enlabs.

The online gambling giant Entain, formerly known as GVC Holdings, has outlined details of its “recommended offer” to acquire Enlabs for £250m as the operator seeks to expand its presence in the Baltics.

Enlabs mainly operates online sports betting and online casino brands across the Baltics along with a small land-based presence.

The “recommended offer”

Entain’s offer, which has been recommended by the Enlabs board, will see the online gambling company pay SEK40 for each Enlabs share on the Nasdaq Nordic exchange. This would value the acquisition at SEK2.8bn which is approximately £250m.

In addition to this, shareholders holding 42.2% of the total shares in Enlabs support the offer.

The offer represents a premium of 15.6% when compared to the weighted average price of each Enlabs share over the last 90 days.

The acceptance period is expected to commence on or around 21 January 2021 and expire on or around 18 February 2021.

If the acquisition goes ahead, entain will become the owner of more than 90% of Enlabs’ shares, which is one of the biggest operators in the Baltics.

Enlabs is also estimated to generate €89.5m in net gaming revenue over the next year with an EBITDA of €23.5m

In a statement, Entain’s CEO explained that the acquisition of Enlabs aligns directly with its growth strategy which involves entering locally regulated gambling markets where it does not have a presence.

Shay Segev, CEO of Entain said: “The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets. We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities. 

“Enlabs is already a strong and rapidly growing business in its own right, but we now have a fantastic opportunity to turbocharge its growth by leveraging the power of our unparalleled proprietary technology, scale, product and marketing expertise.”

In November 2020, Enlabs completed its acquisition of Global Gaming, which allowed it to expand its brands and products into the Nordic countries and develop a presence in Eastern Europe. If Entain acquired the business it would also have a route into these markets.

Enlabs chairman Niklas Braathen said: “When Entain’s interest to acquire Enlabs emerged, we instantly saw the strategic logic. 

“Our interaction with them so far has confirmed they will provide an excellent home for the company, its customers and employees. Entain’s experience and track record in many different geographic markets, together with its market-leading proprietary technology and world-class marketing skills are key attractions for Enlabs as we look to grow in the Baltics and beyond. Finally, Enlabs has achieved an enormous amount as an independent business, but we recognise the established trend of industry consolidation and the growing importance of scale.”

Entain has confirmed that if the deal goes ahead, Braathen will continue to support the business in the development of group operations and offering guidance on sustainable growth in the Baltics.

If successful, Braathen will, in turn, invest €15m in Entain’s shares within four months.

Another deal for Entain to keep track of

Entain’s “recommended offer” to acquire Enlabs comes after it revealed its US sports betting partner MGM Resorts International made an £8bn offer to acquire the business.

Earlier this week, MGM Resorts put forward a proposal to acquire the Ladbrokes operator with 0.6 MGM shares for each share in Entain. Based on closing prices from 31 December 2020, this would amount to 1,383 pence per Entain share and would value the business at $11bn (£8.11bn).

Under the terms of the proposal, Entain shareholders would own approximately 41.5% of the enlarged business. MGM also indicated that a limited partial cash alternative would be made available to Entain shareholders.

Entain argued that the bid “significantly undervalues” the company and ultimately rejected the deal.

Under Rule 2.6(a) of the City Code on Takeovers and Mergers, MGM must make a firm intention to bid for Entain by 5pm on 1 February or the business must announce it does not intend to make an offer.

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