Billionaire Kenneth Dart has had his eyes set on buying Swedish gaming technology company Evolution through his Candle Lake Limited investment tool. However, Evolution has urged its shareholders to reject the offer, saying it is worth much more.
Evolution Pushes for Rejecting the Bid
Kenneth Dart spearheaded his bid for Evolution last month when he purchased 30% of the company’s shares. Under Swedish law, acquiring a 30% stake in a company triggers a mandatory offer for the remaining shares. The acceptance period for the offer began on August 17 and is expected to run until around September 15.
Earlier this month, Candle Lake offered SEK 131.7 billion (about $13.9 billion), which equates to about SEK 695 (about $73) per share. However, when the investment firm made this offer on August 13, Evolution’s per-share price stood at SEK 733.30 (around $77), prompting the company to urge other investors to reject the bid. Since then, this price has risen further.
Evolution said that, based on its assessment and the discount to the company’s current share price, its board considered the offer insufficient to reflect Evolution’s fair market value. The board took several factors into account when making its recommendation, including the company’s current financial position, prospects and long-term potential, as well as the offer price itself.
The company also acknowledged Candle Lake’s earlier statement that it had no intention of acquiring Evolution outright. Instead, Dart was making the offer solely to fulfil its legal obligation under Swedish takeover rules.
What Happens Next?
Evolution’s board of directors’ recommendation to reject the offer may not be the final chapter in a potential full acquisition of Evolution. In its initial offer, Candle Lake stated that if its stake in Evolution exceeded 90%, it intended to launch compulsory acquisition proceedings for the remaining shares. It also said it would seek to delist the company from Nasdaq Stockholm.
Evolution’s share price edged higher on August 24 following the board’s recommendation to reject the offer. At the time of writing, the stock was up 0.6% from its opening price at SEK 825, putting it comfortably above Candle Lake’s SEK 695 per-share offer. As such, some experts have claimed that it is unlikely Candle Lake would be able to acquire Evolution any time soon.