Evolution faces mandatory bid after Dart buy

• Candle Lake Limited, the investment vehicle of billionaire Kenneth Dart, has acquired 2,050,000 shares in Evolution AB.
• The purchase lifts Candle Lake’s total holding to 59,798,619 shares, or approximately 30.02 percent of Evolution’s shares and votes.
• Candle Lake now has four weeks to either launch a mandatory takeover offer for Evolution or cut its stake below the threshold.

Candle Lake Limited, the investment vehicle of Cayman Islands-based billionaire Kenneth Dart, has triggered a mandatory offer obligation in Evolution AB after acquiring 2,050,000 additional shares in the Swedish live casino supplier.

The purchase lifts Candle Lake’s total holding to 59,798,619 shares, equivalent to approximately 30.02 percent of Evolution’s shares and votes, according to a disclosure dated 24 July.

Four-week deadline

Under Chapter 3 Section 1 of the Swedish Act on Public Takeovers on the Stock Market, any shareholder passing 30 percent of the votes in a company on a regulated market must disclose the crossing and act on it.

Evolution’s shares trade on Nasdaq Stockholm’s Large Cap segment, and the group ranks among the world’s largest suppliers of B2B live casino technology to online gambling operators.

Candle Lake now has four weeks from the acquisition to either launch a mandatory takeover offer for Evolution’s remaining shares or reduce its holding to below 30 percent of the voting rights. Roschier Advokatbyrå AB is acting as legal advisor to Candle Lake on the matter. The disclosure itself is not an offer to acquire shares, and any formal bid would follow under separate takeover procedures.

Separate reporting indicates the threshold was crossed partly through shares transferred from related entities Spring Mountain Investments and LBS Limited, with LBS Limited additionally holding a cash-settled equity swap covering just over four million further Evolution shares. Dart has built his Evolution position gradually over several years, moving past a 17 percent stake before crossing into mandatory bid territory this year.

Bid price floor

Any mandatory offer Candle Lake makes would need to match the highest price Dart paid for Evolution shares recently, reported to be in the region of SEK700, or roughly €63.75. Dart is not obliged to offer a premium beyond that level to attract remaining shareholders.

Speculation has emerged over whether Dart, whose family fortune traces to the Solo Cup packaging business, will pursue a full bid or instead trim his stake below the threshold. He has historically built large positions in sectors such as tobacco and gambling without seeking outright control.

Separately from the Evolution position, Dart raised his stake in Flutter Entertainment to 27.6 percent through Candle Lake in May, up from 25 percent, making him the sports betting group’s largest individual shareholder.

Scrutiny and litigation

Evolution has faced heightened scrutiny in recent years. The supplier agreed a £4.75 million settlement with Britain’s Gambling Commission earlier this month, closing an 18-month licence review that found its content had reached British customers via six unlicensed websites run by two operators, with no broader pattern of unlicensed access identified.

Martin Carlesund, Chief Executive of Evolution, said:

“At Evolution, we always want to do what is right, and it is not acceptable that six unlicensed sites offered Evolution content in the regulated UK market. We do not want traffic from unlicensed operators and will always move quickly to address any such situation.”

Rival supplier Playtech separately commissioned a £1.8 million intelligence dossier alleging Evolution’s games were accessible in prohibited jurisdictions, claims Evolution has denied.

Evolution has since moved to add a Playtech subsidiary to its New Jersey defamation lawsuit, and the case remains ongoing. Evolution also terminated its planned acquisition of US table game supplier Galaxy Gaming after regulatory approval delays, weeks after reporting a 1.2 percent year-on-year decline in Q2 net revenue.

Evolution shares were trading up 4.4 percent on the day at SEK726 at the time of the Candle Lake disclosure, though the stock has fallen by more than 17 percent over the past 12 months.

The company separately confirmed it had bought back 1,023,577 of its own shares between 20 and 24 July as part of a €2 billion buyback programme launched in May, alongside its wider capital return plans. Some analysts have suggested a return to private ownership could ease the scrutiny Evolution faces as a listed company, given the intensity of attention its regulatory disputes have attracted compared with rival gaming suppliers.

The coming weeks will determine whether Evolution remains one of the world’s most closely watched public gambling stocks, or moves towards private ownership under its largest shareholder.