Enlabs shareholder hedge fund to fight “inadequate” Entain takeover bid
Investors query “unusual circumstances” of £250m takeover proposal involving Enlabs chairman Niklas Braathen
Major Enlabs shareholders have joined forces to rebuff the acceptance of a £250m takeover bid from Entain.
Alta Fox Capital Management, which owns a 3.34% stake in Enlabs, confirmed it would reject any overtures by the FTSE 100 operator to purchase its shareholding at the proposed offer price of SEK40 per share.
“This offer materially undervalues the company, represents a negligible premium of 1.1% to the pre-offer trading price and has unusual circumstances that make us question why Enlabs Chairman Niklas Braathen accepted such an inadequate offer,” said Alta managing partner Connor Haley.
The hedge fund further revealed that other shareholders, representing 10.07% of available shares, offered written support to block the takeover bid.
The mooted £250m deal has gained the support of 42% of Enlabs shareholders, including Braathen and senior board member Christian Haupt.
Under the terms of the offer, Entain must purchase more than 90% of shares in the business, after which it will be allowed to initiate a compulsory acquisition of the remaining shares.
Braathen will be retained by Entain in his current role should the takeover complete.
In addition, it is understood Braathen will invest €15m (£13.5m) in Entain shares via a family holding company (Erlinghundra AB) within four months of the funds being received by Enlabs – much to the concern of the rebelling shareholder group.
“The fact Entain will compensate Braathen as a senior executive post-deal and that the CEO of Entain just announced his departure is highly unusual,” said Haley.
“It leads us to conclude that while this is a good deal for Entain, it is a bad deal for Enlabs minority shareholders.”
These comments were last week echoed by Enlabs shareholder Hans Isoz, who felt the deal should be rejected based on the firm’s growth potential.
“If Entain wants to acquire Enlabs, a highly accretive and strategic asset, Entain must compensate Enlabs shareholders for its excellent growth prospects as a standalone entity,” Haley added.
Alta Fox has called on Entain to raise its offer to SEK55 per share. Stockholm-listed Enlabs is trading at SEK44.80 at the time of writing.