As the FTSE100 gambling company aims to extend its Baltic business presence, Entain Plc has released the terms and conditions of its ‘recommended offer’ to shareholders of Enlabs AB.
Proposed cash offer
Entain has proposed a cash offer of SEK 40 per share of Enlabs on the Nasdaq Nordic exchange to update the market, valuing its most recent M&A target at SEK 2.8 billion (approximately £ 250 million).
Compared to the weighted average price for each Enlabs share over the past 90 days, this bid represents a premium of 15.6 percent and 42.3 percent over the past 190 days.
The bid will be funded by Entain’s own cash resources and is expected to add approximately 0.2 to the 2021 net debt to EBITDA ratio of Entain.
The board of Enlabs accepted the bid to shareholders, with company chairman Niklas Braathen emphasizing that a instant strategic rationale was provided by Entain’s contract.
Excellent home for the company
Braathen said: “Our interaction with them so far has confirmed that they will provide an excellent home for the Company, its customers and employees.
“Entain’s experience and track record in many different geographic markets, together with its market-leading proprietary technology and world-class marketing skills are key attractions for Enlabs as we look to grow in the Baltics and beyond.
“Finally, Enlabs has achieved an enormous amount as an independent business, but we recognise the established trend of industry consolidation and the growing importance of scale.”
Entain will become the owner of more than 90 percent of the shares in Enlabs, one of the largest betting operators in the Baltic region, if the offer is completed.
Enlabs is expected to produce EUR 89.5 million in net gaming revenue over the next year and EUR 23.5 million in EBITDA.
Entain expansion plans
Enlabs’ recent success fits well into the expansion plans of Entain itself. The company, based in Riga, is the market leader in Latvia, the second largest betting operator in Estonia and one of Lithuania’s top five firms.
The acquisition of Global Gaming in November 2020 allowed the company to extend its brands and products into the Nordic countries, with a presence in Eastern Europe also being established.
The online gambling portfolio of Enlabs is led by its ‘Optibet’ flagship brand, which operates in the Baltic and Scandinavian markets.
Enlab acquisition aligns international market expansion
Entain Group CEO Shay Segev said: “The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets. We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities.
“Enlabs is already a strong and rapidly growing business in its own right, but we now have a fantastic opportunity to turbocharge its growth by leveraging the power of our unparalleled proprietary technology, scale, product and marketing expertise.”
Entain stated in its footnote that Braathen will continue to assist the company in the creation of group operations and in providing guidance on sustainable growth in the Baltic region.
If the deal is successfully completed, Braathen will, in exchange, invest EUR 15 million in the shares of Entain within four months.
The FTSE100 group confirmed that the deal was in line with the corporate goals of its new charter, which aims to produce all corporate revenues from controlled markets by the end of 2023.
The transaction is scheduled to be completed in the first quarter of 2021, subject to both the receipt of regulatory approvals and the approval of shareholders of Enlabs.