US investor requests that Entain goes over £250m Enlabs offer
Entain Plc is facing a shareholder clash in its £250 million pursuit to obtain Enlabs AB, the leading Baltics online gambling group.
Texas hedge fund Alta Fox Capital Management, the owner of 3.3% of Enlabs shareholding, has said that it does not accept the sale of any shares to Entain at the recommended offer of SEK 40 (£3.50) per share. Alta Fox, led by US investor Connor Haley, claimed that Entain has ‘materially undervalued the company’ by suggesting an offer to investors that supplies a ‘negligible premium of 1.1% to the pre-offer trading price’.
Refusing to accept Entain’s bid, Alta Fox said that it has the support from ‘more than 10% of Enlabs’ investors that will be rejecting Entain’s suggested offer.
Additional investor concerns have been underlined by Alta Fox, including the terms of the deal such as “unusual circumstances that make us question why Enlabs’ Chairman Niklas Braathen accepted such an inadequate offer”.
Moreover, Alta Fox is concerned that Entain’s guarantee that Braathen will be offered an executive position post-deal may have affected the recommendation of the FTSE100 firm’s approach. Right now, Braathen serves as Enlabs biggest shareholder, maintaining 19.50% equity through his private investment firm Erlinghundra AB.
The executive obtained his significant shareholding in Enlabs, as the founder of Baltic Gaming Group – a company which was acquired by RedBet Gaming back in 2007 – forming Enlabs’ new business entity. Alta Fox has responded to Entain saying that shareholders should be compensated for the firm’s ‘excellent growth prospects and as a standalone entity’.
The US hedge fund is convinced that fair compensation should be priced at 55 SEK per Enlabs share, valuing the company at nearly £337 million. Entain marked Enlabs as a high-value target acquiring dominant market positions in the Baltic markets such as Latvia, Estonia and Lithuania, with the company expected to generate net gaming revenues of €90 million and EBITDA €23.5 million.