Evolution’s board has advised its shareholders to reject the recent mandatory takeover bid from Candle Lake Limited, a move aimed at potentially taking the gaming supplier private.
This recommendation, made public on Monday, follows Candle Lake’s cash offer on August 13 to acquire all outstanding shares of Evolution. The proposed deal could value the company at approximately SEK131.7 billion.
Candle Lake, associated with investor Kenneth Dart, raised its stake in Evolution to over 30% in July with the purchase of an additional 2,050,000 shares. Under Swedish regulations, any investor holding at least 30% of a company’s shares is required to make an offer for the remaining shares.
However, Evolution's board expressed in a statement that Candle Lake's offer does not represent the fair market value of the company. Furthermore, Evolution indicated that the takeover bid appears to be a mere obligation fulfillment, lacking true intention to assume full control or to make significant alterations to the company's operations.
“The board of directors further notes that Candle Lake has stated that its future plans and strategic vision for Evolution do not currently involve any significant changes regarding its future operations,” Evolution explained. “The board assumes this to be accurate and has no reason to disagree.”
Candle Lake had previously indicated that if it acquired more than 90% ownership of Evolution, it would aim to delist the company from Nasdaq Stockholm and take it private. However, the bid's current status suggests obstacles ahead for this transition.
Recent weeks have been tumultuous for Evolution, as the UK Gambling Commission nearly suspended its license after discovering that the company’s games were offered on unlicensed websites. Instead of suspension, Evolution opted for a £4.75 million settlement due to inadequate anti-money laundering and customer due diligence measures.
Additionally, the Swedish company faced setbacks with its attempt to acquire Galaxy Gaming, as the $85 million deal fell apart after the closing period expired in July, leading to the termination of the merger agreement.
On the Stockholm Stock Exchange, Evolution's shares have seen a minor increase, rising by 0.51% to SEK824.20 as trading began today.
