Acquisition No2: The view from below
About the expert:
Dainis Niedra is a professional betting and gambling manager. He has previously been the Director of an entertainment complex, organized various poker series and he was even the head of the Latvian poker federation. Currently, Dainis is Enlabs Managing Director of Center Eastern Europe (CEE). Enlabs owns bookmaker Optibet, which is the largest betting operator in the Baltic States.
It’s been only a few months since we acquired Global Gaming, and now this topic is relevant again. This time we are looking at it from the other side because we’re being acquired.
On the 7th of January British company Entain Ltd (their former name is GVC Holdings) made a public proposal to purchase Enlabs (It is important not to confuse the names while reading further). The price offered is 40 Swedish Kronas per share. Considering that the total amount of shares in issue is about 70m, the company is valued at 280m Euros.
Who are Entain?
Entain is one of the largest gambling companies in the World. They operate in 20 countries spanning 5 continents, offering the full range of gambling products to their customers. The main brands are bwin, Ladbrokes, Coral, BetMGM, Sportingbet, Eurobet, partypoker, Gala, and Foxy. The company has 24 thousand employees and they generated more than 4Bn Euros in NGR (Net Gaming Revenue) during 2019.
Why are they interested in acquiring Enlabs?
The first thing to consider is that the strategic cores of both companies are incredibly similar, developing business in only regulated markets. Entain is not represented yet in the existing or projected markets of Enlabs, which are Latvia, Lithuania, Estonia, Finland, Sweden, Belarus, and Ukraine. Considering the business volume, high brand recognition and how unique some of the Entain products are, we can be sure that the company has clients in the countries mentioned above and will show some profit. But the profit is still unstable. The company has made a public statement claiming that all the profit will be provided via operations with local licenses up to the year 2023.
As was in the case of the Global Gaming acquisition, the shareholders (ours this time) have to decide whether they’re ready to accept the offer or not. A group of main shareholders who have a bit more than 42% has claimed that they’re ready to accept the offer and recommended that the other shareholders do the same. The deadline was set for February 18th, but later was moved back a month to March 18th.
At a price of 40 Swedish Kronas the offer is 42.3% above the weighted average value of the shares for the previous 180 days. However, it’s only 1.1% premium compared to the last day of auction before the offer was published. Entain has fueled interest in Enlabs. There is a large group of shareholders who believe that remaining an independent company leads to a bright future. They are not ready to let go of their shares at this price. The shares are trading at 43 Kronas each currently, which is higher than the offer. So, the deal is likely to be closed (if it happens) much later than initially thought.