CMA Investigates Evolution’s NetEnt Acquisition

The Competition and Markets Authority in the United Kingdom is investigating whether Evolution Gaming’s proposed acquisition of NetEnt would reduce competition in the igaming industry in the region.

The UK competition regulator officially announced yesterday, by notification to those concerned, the start of its merger inquiry before inviting any interested party to comment on the acquisition.

Such comments must be made before the invitation closes on 5 October, after which the CMA will continue to phase one of its review phase before making a decision on whether to enter phase two or to close the investigation on 16 November.

Detailing the beginning of the investigation, the CMA stated: “The Competition and Markets Authority is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

Evolution Gaming had previously expressed an intention of closing the deal on November 2, beginning on August 17, 2020 and expiring on or around October 26, 2020 with an acceptance period.

The proposed deal, an offer recommended to shareholders by the NetEnt board, sees Evolution offering 0.1306 shares for each NetEnt share, each priced at SEK 79.93 and all the company’s shares at approximately SEK 19.6bn.

Compared to the closing price of the NetEnt Series B share on Nasdaq Stockholm on 23 June 2020, the offered consideration per share represents a premium of 43 per cent.

Compared to the combined cost base of both parties as of the first quarter of the year, the merger is projected to result in an annual cost saving of approximately EUR 30 m. This includes the cost savings that NetEnt has already announced of around SEK 150 m. Initially, these were supposed to be fully realised during 2021.