Evolution tells investors to reject Candle Lake bid

• Evolution’s board has told shareholders to reject Candle Lake’s mandatory takeover offer, just over a week after it landed.
• The SEK695 per-share bid values Evolution’s equity at roughly SEK131.7bn (£10.21bn), sitting 5.7% below its share price the day before the bid.
• Kenneth Dart’s Candle Lake also holds stakes in DraftKings, Flutter Entertainment and Hacksaw Gaming.

Evolution’s board has told shareholders to turn down Candle Lake’s mandatory offer to take the live casino supplier private, saying the price falls short of the company’s true worth.

The board published its recommendation on 24 August, barely a week after Kenneth Dart’s investment vehicle put the SEK695 per-share bid on the table on 13 August.

Priced below market

Candle Lake’s offer values Evolution’s equity at roughly SEK131.7bn (£10.21bn). Set against Evolution’s SEK737.2 closing price on 12 August, the last trading day before the bid surfaced, that works out 5.7% cheaper than the stock was already changing hands for.

Candle Lake has said all along it has no plan to fully absorb Evolution unless its stake climbs past 90%, a detail the board flagged directly in weighing its response.

Evolution’s board has appointed Gernandt & Danielsson Advokatbyrå as legal advisers in connection with the offer, and set out its full case against the bid in its official statement.

In the board’s words

Evolution’s board, in a statement, said:

“The board of directors also notes that Candle Lake has expressed that the offer is not motivated by any intention to acquire all outstanding shares in Evolution and that the offer is made pursuant to Candle Lake’s mandatory offer obligation. Based on its assessment, and in light of the discount in offer compared to the company’s current share price, the board of directors considers that the Offer does not reflect the fair market value of Evolution. In view of the above, the board of directors recommends the shareholders to not accept the offer.”

Both sides say the bid won’t change how either business operates day to day. Evolution’s response also beats the clock set by Nasdaq Stockholm, which only required a board view two weeks ahead of the 15 September deadline for accepting the offer.

Dart’s growing web

This is not an isolated move by Dart. His mandatory bid obligation at Evolution traces back to July, when his stake crossed the 30% mark under Swedish takeover rules, and it comes only days after Candle Lake picked up a 5.8% stake in DraftKings.

Add to that an economic interest of close to 29% in Flutter Entertainment, built partly through equity swaps, 31.56% of Evolution itself, and 0.6% of Hacksaw Gaming, another Nasdaq Stockholm-listed name, and a pattern starts to emerge across some of the sector’s largest quoted companies.

None of this has translated into a stated desire to take any of them fully private. Evolution’s own recent run has been mixed: an H1 revenue slip to €1.03 billion, a €2bn share buyback programme capped at up to 19.9 million shares, and a £4.75m Gambling Commission settlement over black market content, all of which sit in the backdrop to how the board weighed what the company is really worth right now.

Waiting on Dart

The acceptance window stays open until 15 September, with settlement pencilled in for around 23 September if any investors do take up the offer.

A board telling shareholders to say no doesn’t kill a bid outright, but it does put a marker down on price that Candle Lake will now have to answer to. Whatever Dart decides next, his stake in Flutter is edging toward a threshold of its own, and Evolution’s stand may end up shaping how that situation plays out too.