Minority shareholders in Enlabs reject Entain’s £250m offer

Enlabs’ shareholders owning 10.7% of the company have rejected Entain’s bid to acquire the company.

Shareholders owning 10.7% of Enlabs have rejected Entain’s £250m bid to take over the company as it “materially undervalues” the business.

Some shareholders unhappy with the deal

Earlier this month, online gambling operator Entain detailed its offer to acquire Enlabs in an offer worth £250m.

The cash offer is supported by the Enlabs board and is the equivalent to SEK40 per share in the business. Enlabs shareholders which hold 42.2% of Enlabs’ shares have also agreed to accept the offer.

However, not all of Enlabs’ shareholders are happy with Entain’s offer. Alta Fox Capital Management, which owns 2,332,625 shares in Enlabs, or 3.34% of the total shares in the business, said it does not intend to tender any shares at the current price being offered.

Alta Fox said that it has support from several other minority shareholders in the business as well as Topline Capital, which holds 2.44% of the shares in Enlabs. 

Alta Fox also explained that private investors Hans Isoz, Jimmy Jonsson and Ludwig Pettersson who each hold 2.58%, 1.71% and 0.63% of Enlabs’ shares respectively are also against Entain’s offer.

In a statement, Alta Fox said: “This offer materially undervalues the company, represents a negligible premium of 1.1% to the pre-offer trading price and has unusual circumstances that make us question why Enlabs chairman, Niklas Braathen, accepted such an inadequate offer.

“The fact that Entain will compensate Braathen as a senior executive post-deal and that the CEO of Entain just announced his departure is highly unusual. It leads us to conclude that while this is a good deal for Entain, it is a bad deal for Enlabs minority shareholders.”

Alta Fox has instead put forward an alternative proposal, calling for Enlabs to pay SEK55 for each share in Enlabs, which would value the business at approximately £337.6m. Alta Fox said that if Entain can not meet this price, then Enlabs should remain as its own entity.

The minority shareholder said: “Alta Fox confidently believes we have the support to block a squeeze-out of minority shareholders, legal counsel to ensure their fair treatment under Swedish law, and the determination to obtain a fair price that is reflective of Enlabs’ standalone growth prospects.”

More work for Entain

Entain will now have to decide how to respond to Enlabs’ investors who are unsatisfied with the proposed deal. 

The Ladbrokes operators must also find a replacement CEO after it was announced last week that its current CEO Shay Segev gave notice to step down from his role

Segev, who became the operators’ CEO in July 2020 replacing Kenny Alexander, has a notice period of six months and will remain in his current position until the end of the six months or until a new CEO has been appointed.

In addition to this, Entain and MGM Resorts International are in talks over a potential mega-merger. 

Earlier this month, the UK-based operator revealed that MGM Resorts put forward a proposal to acquire the business 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).

Entain rejected the offer as it believed the US casino giants’ bid “significantly undervalues” the business and its growth prospects. However, MGM’s largest shareholder, InterActive Corp, has pledged $1bn towards getting the deal done.

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