Entain unconcerned by threat of Enlabs shareholder revolt
CFO Rob Wood suggests offer only “looks very skinny” after share price rose 10% on news of takeover bid
Entain management are not worried about a potential rebellion of Enlabs shareholders having formally placed a £250m bid to buy the Baltics-facing operator.
The offer – originally lodged on 7 January – valued Enlabs shares at SEK40, a premium of approximately 15.6% of its volume-weighted average price during the prior 90 days of trading on the Nasdaq First North Growth Market.
The takeover was also conditional on acceptance from 90% of Enlabs shareholders. Since then, however, a group of shareholders holding a combined 10.7% of Enlabs stock have signed a letter of intent to reject the proposal at that price, insisting it undervalues Enlabs and its growth prospects.
During Entain’s Q4 results presentation yesterday, CFO Rob Wood was asked if he was concerned about a growing revolt and whether the FTSE-100 firm would consider reducing the 90% threshold.
“Not at this stage,” said Wood. “We were very clear that we offered a full price of 12 x EBITDA and we think that’s a fair valuation.
“The board supported it, they had a fairness opinion done and an independent valuation by committee,” he added.
Since Enlabs emerged as a takeover target for Entain, its stock has risen by more than 10% to a price of SEK44.60 per share.
Wood added: “I know on the overnight premium it [the offer] looks very skinny, but on a 90-day basis, it was nearer 20% and on the 100-day basis it was 40%, so the share price just ran away a little bit.”
The takeover has already been given the green light by Enlabs’ board of directors, as well as shareholders accounting for 42.2% of the company’s total share capital.
That figure includes the support of Enlabs chairman Niklas Braathen, who will be retained by Entain when the acquisition completes.
As a condition of the deal, Braathen will invest €15m (£13.5m) in Entain shares via a family holding company within four months of the acquisition funds being received by Enlabs.
“The valuation was full and the important thing is that we have 42% irrevocables,” said Wood to reassure analysts.
“Let’s hope there aren’t too many [Enlabs] shareholders that get left stuck in what would otherwise be a pretty illiquid stock on the secondary Swedish market,” he added.
Wood was promoted to the deputy CEO role at Entain this week amid a management reshuffle.