Entain’s acquisition bid to Baltic operator Enlabs AB disappointed some shareholders of the acquired company, a report in EGR reveals. Earlier in the month, the wholly-owned by Entain Malta-based subsidiary Bwin Holdings offered SEK2.8 billion for the Nasdaq First North-listed operator.

Entain’s Acquisition Bid in Tatters

The tabled bid of SEK40 per share “significantly undervalues Enlabs”, Hans Isoz, a shareholder with 2.58% stake in the Baltic operator stated, while expressing his disappointment at the proposal. The large shareholder firmly believes Entain should increase its offer otherwise shareholders would have to impetus to sell.

Isoz further argues that Enlabs is much better positioned in the Baltic markets, despite being smaller in size and less diverse than Entain, claiming that the company is firmly on the way to achieving earnings before interest, tax, depreciation and amortization (EBITDA) of €50 million in 2022.

Considering that currently Entain is trading at 12.7xEV/EBITDA, Hans Isoz states Enlabs should be worth at least Entain’s multiple, which, with €50 million EBITDA, would lead to a share value of SEK92 per share, yet Bwin Holdings offered less than half of that.

Offer Should Reflect Part of Future Value

Provided that the amount of EBITDA is just a projection, the large shareholder continues that if the proposed price does not reflect a piece of the future value of the company, then shareholders have no stimulus to sell their stakes, and urged Entain to up the ante.

“Given that value is still a couple years away, I think a bid will, and must, be significantly higher to reflect that, although of course not double. We as shareholders must get something out of the future value.”

Hans Isoz

Entain’s offer which seeks to acquire more than 90% of the shares and then initiate a process of compulsory acquisition for the rest, has already been accepted from shareholders holding 42.2% of the capital, and was being recommended by the Independent Bid Committee at Enlabs for shareholders to accept.

“If a prospective acquirer is unwilling to at least partially pay for the future growth of the business, the best outcome for shareholders is to not sell the company. Enlabs is a publicly traded, profitable, growing business. The company is in a position of strength and does not need to sell for a price that does not fully reflect its long-term value.”

Hans Isoz

Hans Isoz’s calculations have a point, though, as currently Enlabs is trading at SEK42 on Nasdaq Stockholm, making Entain’s SEK40 offer on the table unattractive and raising the prospects of the move to acquire the operator being blocked by shareholders.

“The shares are trading above the SEK40 per share offer price, an indication that other investors agree with my assessment that the bid undervalues Enlabs.”

Hans Isoz

The shareholder concluded by taking the liberty to suggest to shareholders willing to part with their stake to do that by selling in the market and let others who wish to remain as shareholders to hold onto their stakes.