Evolution board calls for shareholders to reject Candle Lake takeover offer

Evolution’s board of directors has recommended that shareholders reject the mandatory takeover offer from Candle Lake Limited, stating that the SEK695 ($72.89) per share bid does not reflect the gaming supplier’s fair market value. The offer, which could value Evolution at approximately SEK131.7 billion, was announced on 13 August following Candle Lake’s acquisition of a stake exceeding 30% in the company.

Candle Lake, the investment vehicle of Kenneth Dart, increased its stake in Evolution above the 30% threshold in July after acquiring an additional 2,050,000 shares. Under Swedish law, any single investor that owns at least 30% of a company’s shares must make a mandatory offer for the remainder of the business.

Board Questions Buyer Intent

In a statement released on Monday, Evolution’s board expressed skepticism about Candle Lake’s motivations, suggesting the offer was made purely to satisfy legal obligations rather than from genuine interest in acquiring the full company. The board noted that Candle Lake has indicated it does not plan any material changes to Evolution’s operations following the offer.

“The board of directors further notes that Candle Lake has stated that its plans for the future business and general strategy of Evolution, following the offer, do not currently include any material changes with regard to Evolution’s future operations,” Evolution stated. “The board of directors assumes that this is correct and has no reason to take a different view in any relevant respect.”

Delisting Plans Face Obstacles

Candle Lake had previously indicated that if it obtained ownership exceeding 90% of Evolution, it would seek to take the company private by delisting it from Nasdaq Stockholm. However, with the board’s recommendation for shareholders to reject the offer, these plans appear to have encountered significant resistance.

The rejection comes during a turbulent period for Evolution. The company recently avoided having its licence suspended by the UK Gambling Commission after its games were found on unlicensed websites in the jurisdiction. Evolution paid a £4.75 million settlement for failing to maintain sufficient anti-money laundering and customer due diligence controls.

Recent Setbacks and Market Response

Adding to Evolution’s recent challenges, the Swedish supplier’s $85 million deal to acquire Galaxy Gaming fell through in July when the closing period expired and Evolution terminated the merger agreement.

Despite the board’s rejection of the takeover offer, Evolution’s stock showed resilience, edging up 0.51% to SEK824.20 since the Stockholm Stock Exchange opened following the announcement. The share price significantly exceeds Candle Lake’s SEK695 offer, suggesting the market agrees with the board’s assessment that the bid undervalues the company.

Evolution remains one of the leading live casino and gaming software suppliers in the global iGaming industry, and the board’s stance indicates confidence in the company’s independent future and market position.