Evolution's board has advised shareholders to reject a recent mandatory takeover offer from Candle Lake Limited, which aims to transition the gaming supplier into a private entity. This recommendation, disclosed on Monday, meets the backdrop of a cash offer from Kenneth Dart's investment vehicle, made public on August 13, seeking to acquire all outstanding shares of Evolution. Should this deal proceed, it could value the company at approximately SEK131.7 billion.
Candle Lake raised its stake in Evolution to over 30% in July by purchasing an additional 2,050,000 shares. Swedish law mandates that any investor possessing at least 30% of a company's shares must propose an offer for the remaining stock.
In light of the bid, Evolution's board issued a statement asserting that the offer does not accurately represent the true market value of Evolution. The company contended that Candle Lake's proposal seems directed at fulfilling a legal requirement rather than showing a genuine intention to acquire the entirety of the business or to implement significant operational changes.
According to Evolution, “Candle Lake has stated that its plans for the future business and general strategy of Evolution, following the offer, do not currently include any material changes with regard to Evolution's future operations.” The board indicated that it believes this assessment to be accurate.
Candle Lake had previously declared that if it managed to acquire over 90% ownership of Evolution, it would pursue privatizing the company and removing it from Nasdaq Stockholm. However, those ambitions appear to face challenges.
Recently, Evolution has experienced notable turmoil. The UK Gambling Commission nearly suspended its license after the company's games were found on unlicensed websites within the jurisdiction. To address these issues, Evolution opted to pay a £4.75 million settlement for shortcomings in maintaining adequate anti-money laundering and customer due diligence procedures.
Additionally, Evolution's plan to purchase Galaxy Gaming for $85 million fell through as the allocated closing period ended in July, resulting in the termination of the merger agreement. Today, shares of Evolution have slightly risen by 0.51%, trading at SEK824.20 since the Stockholm Stock Exchange opened.
