Enlabs State Entain Offer ‘Materially Undervalues The Company

Enlabs shareholders said that an offer of SEK 2.8bn, equal to approximately £ 250m, made by Entain “materially undervalues the company.” Entain is one of the biggest gambling operators with popular brands such as Gala Bingo, Foxy Bingo among many other big brand throughout the UK and across the world.

In a letter to the company’s fellow shareholders, Alta Fox Capital Management, which currently holds 2,332,625 shares, representing 3.34 percent of the total outstanding shares, states that it is not intending to tender any shares at the current offer price of SEK 40 each.

Signed off by Connor Haley, Alta Fox Capital Management’s managing director, the company is joined by a number of fellow individuals in its rejection position, who have a combined stake in the group of over 10 percent.

Earlier this month, Enlabs made its bid of SEK 40 per share, with shareholders holding a total of approximately 42.2 percent of the total number of shares in Enlabs that were said to be set at the time of acceptance of the offer. It was planned that the acceptance period will begin on or around January 21, 2021, and expire on or around February 18, 2021.

Highly accretive and strategic asset

If Entain wishes to buy a “highly accretive and strategic asset,” those opposed to a transaction at the present price claim that the firm must reward shareholders as a standalone entity for its excellent growth prospects. 

Alta Fox claims that the minimum fair price that will reward shareholders is SEK 55 per share of Enlabs, valuing the firm at approximately £ 337 million, with a desire to stay with any bid less than this as a separate entity highlighted.

Undervalues company

The letter says: “This offer materially undervalues the company, represents a negligible premium of 1.1 per cent to the pre-offer trading price, and has unusual circumstances that make us question why Enlabs‘ chairman, Niklas Braathen, accepted such an inadequate offer. 

“The fact that Entain will compensate Braathen as a senior executive post-deal and that the CEO of Entain just announced his departure is highly unusual. It leads us to conclude that while this is a good deal for Entain, it is a bad deal for NLAB minority shareholders. 

“Alta Fox has retained legal counsel to protect our interests in this matter and has spoken with other large shareholders, a portion of which have signed in support of this letter and represent over 10 per cent of total shares outstanding.”