"Now we are a part of the gigantic Entain machine!"
Dainis Niedra is a professional betting and gambling manager. He has previously been the Director of an entertainment complex, organized various poker series and has even been the head of the Latvian poker federation. Currently, Dainis is Enlabs Managing Director of Center Eastern Europe (CEE). Enlabs owns the bookmaker Optibet, which is the largest betting operator in the Baltic States.
In the middle of February I wrote a short essay on the intentions of Entain (Entain Group (former GVC Group) is the second largest gambling company in the world and takes one of the top three positions on most markets where it operates) to acquire our company (Enlabs). I promised back then that I would write something about it when the deal is either closed or has been cancelled. I can tell you now the deal has been closed. Of course we still need to go through several procedures, but to all intents and purposes Enlabs has ceased to exist as an independent public company.
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.
On January 7th 2021, Entain made a public statement of their intention to purchase shares of Enlabs for 40SEK per share. This valued the company at 290 million euro. At that time Entain already had the consent of the Enlabs majority shareholders to sell their shares (they held about 42%). It was necessary to have at least 90% to successfully close the deal fast.
Some of the minority shareholders considered the price unfair, as they believed in the company and weren’t ready to get rid of their shares for the price offered. A coalition was formed. It was led by an American fund who had over 10% of shares in total. The coalition made a public statement that they would not accept the Entain’s offer thus blocking the acquisition. Meanwhile the market price of the Enlabs shares has grown and reached 45-46SEK per share, a premium to the offer price. Shareholders had no reason to accept the Entain’s offer if they could sell their shares on the open market for more.
After a short pause Entain changed his position and made a new offer on March, 1st. The new offer was to purchase Enlabs for 53SEK per share. Now the company was valued at 384 million euro, 30% more than before. Enlabs’s net revenue was 15 million euro in 2020, thus the company was valued at 26 price to earnings.
Analysts claim that the Baltic market has never seen deals with such a high multiple. It was also a good price using another metric. Promising startups are usually roughly valued in the Silicon valley at 1 million dollars for each “employee”. We got almost 1,5 million. If we would extract online business and re-evaluate the company then we could see that we could have got more than 2 million euro per 1 “employee”.
On the morning of March 22nd, four days after the period of taking the decision was officially closed, it was announced that 94,2% of Enlabs’s shareholders decided to accept the new Entain offer. This is how we transformed from a regional company to being part of the gigantic machine.
Nothing will change in terms of daily operations and processes. Especially in the short and medium terms. It is already clear that we will have free access and we will start integrating the promising products of Entain that we would like to see on our markets. The same goes for the brands of the parent company.
Now we are exploring niches or other possibilities to get a part of the market through an aggressive launch. It includes the markets we are most interested in, those where we are trying to receive a license. We are not planning a strong integration to the group’s structure yet. We will remain as autonomous as possible.
There is an American writer, social psychologist and professional motivational coach doctor called Heidi Grant Halvorson. She writes in a motivation psychology book of hers that 99% of us choose one of two motivation models. We either do everything to win or we do everything to avoid losing. I believe that the deal creates a perfect situation for Enlabs to aim for winning on the current and future markets.