Kindred “fully committed” to current direction amid potential M&A talk
Corvex Management doubles shareholding in operator as activist investor urges evaluation of “strategic alternatives” including potential sale
Kindred Group has moved to quell speculation regarding its future after US investment fund Corvex Management acquired a 10.12% shares and voting rights position in the Stockholm-listed firm.
Issuing a declaratory statement, Kindred Group’s board of directors and management insisted it was “fully committed” to the operator’s current strategic direction.
“We are confident about the long-term opportunities for the company and value creation potential for all our shareholders. We welcome and look forward to continuing a constructive dialogue with all our shareholders going forward,” Kindred Group chairman Evert Carlsson said.
Last month, Kindred posted a 30% year-on-year (YoY) decline in its Q1 2022 revenue as its absence from the Netherlands continues to severely impact operations.
The firm also reported a dramatic 77% decline in underlying EBITDA for the quarter, falling from £106m in Q1 2021 to £24.5m in Q1 2022 as well as a 91.2% drop in post-tax profits.
The declaration comes as New York-based investment fund Corvex Management grew its shareholding beyond 10% on April 28, requiring a declaration by Kindred under Nasdaq Stockholm regulations.
Corvex’s position now equates to 10.12% of total voting stock, or 23,283,758 shares. The investment represents a doubling of Corvex’s holdings as reported in February, when the activist investor owned a 5.29% stake, or 12,181,785 shares.
In a statement accompanying the declaration, Corvex referenced “several” inquiries from investors regarding the increase of its share position, acknowledging the board’s efforts, but calling for a realignment of its ongoing objectives following recent losses.
“We are excited to be large shareholders of Kindred,” Corvex Management said.
“To date, we have had constructive conversations with both the chairman of the board and senior management of Kindred. We believe Kindred has built a strategic position in the rapidly growing global online gaming space,” the firm explained.
Expanding on its involvement, Corvex called for the appointment of an independent entity to assess other potential avenues open to Kindred, including potential M&A activity.
“Given recent developments, we believe the Kindred board should immediately retain a leading, global financial advisor to evaluate strategic alternatives, including the potential value that could be achieved through a sale or business combination.”
Corvex continued: “A fully informed board will be in the best position to weigh any strategic alternatives, compared with Kindred’s stand-alone business plan.
“While we have not pre-judged any path for Kindred, we believe the board should possess all relevant market information and let the data drive the decision-making process. We look forward to continuing to work with the Kindred team.”
In the wake of the Kindred’s remarks, its shares are up 9.5% to around SEK105 (£8.52).