Evolution AB has received a $13.8 billion acquisition offer from Kenneth Dart’s Candle Lake Ltd., but it’s unlikely that the investor is aiming for complete control of the Swedish gaming company.
According to Swedish laws, when an investor exceeds a 30% interest in a publicly traded company, they are required to make an acquisition offer. Candle Lake crossed that threshold in late July. The premium offered by Dart may indicate that he does not intend to acquire majority control of Evolution, with the offer being only 1.6% above the gaming stock’s average trading price for the 20 days leading up to July 24 – the date when Candle Lake’s stake in the online gaming company went past 30%. The offer is lower than the current price of Evolution shares.
“Candle Lake’s bid below the current share price is designed to fulfill stock exchange requirements, rather than a desire to own all the outstanding shares in Evolution,” noted Jefferies analyst James Wheatcroft in a report to clients.
Many analysts speculate that Evolution will likely reject the acquisition offer. If this happens, Swedish law allows Candle Lake to continue acquiring shares of the betting company for up to a year without submitting a new takeover proposal.
Candle Lake Admits It Doesn’t Want to Own Evolution
In a 10-page disclosure on Thursday, Aug. 13, Candle Lake clearly stated that it does not aim to fully own Evolution, considering its stake in the company as a long-term investment and expressing admiration for the management team.
“Candle Lake is a long-term investor and views its shareholding in Evolution as a financial investment in a well-managed, highly profitable business,” as per Dart’s investment vehicle. “Evolution has, since its founding in 2006, developed into the global market leader in business-to-business (B2B) live casino solutions, and Candle Lake recognizes the quality of Evolution’s management and the strength of its operational platform. The Offer is, however, not motivated by any intention to acquire all outstanding shares in Evolution.”
Dart’s company also clarifies that the published offer complies with Swedish law and that it has no intention of taking an activist role at Evolution.
“Candle Lake’s plans do not currently involve any significant changes to Evolution’s future operations,” according to the disclosure. “The Offer will not impact Candle Lake’s operations, and no material changes are planned.”
Dart Is Also a Major Flutter Investor
Dart, who renounced his U.S. citizenship in 1994 for tax purposes, has an estimated net worth of $11.2 billion. His investment portfolio has included “sin stocks” like tobacco and gaming companies for a long time.
Known in the gambling sector, Dart holds about a 30% stake in Evolution and a similar percentage in FanDuel parent Flutter Entertainment (NYSE: FLUT) through swaps.
The stake in Flutter has risen considerably in recent months, indicating that the billionaire has been buying the stock as its value decreases. A regulatory filing from earlier this week reveals that one of Dart’s holding companies has entered into a total return swap agreement for 332,237 notional shares of Flutter.