Evolution’s largest shareholder Candle Lake sees only 0.06% of shares tendered
A rundown of the ownership tussle around Evolution, parent of Nolimit City, NetEnt and Red Tiger. Candle Lake, which passed the 30% stake mark, made a mandatory tender offer at 695 kronor per share, and after the board recommended rejection, only 0.06% of shares were tendered.
Key takeaways
- Candle Lake, controlled by US investor Kenneth Dart, passed a 30% stake in Evolution on July 24.
- In line with Swedish rules, it made a mandatory tender offer of 695 kronor per share on August 13. It said it would pursue delisting if its stake exceeded 90%.
- Evolution’s board recommended against accepting on August 24.
- In the September 16 results announcement, shares tendered made up 0.06% of the total.
Nolimit City, NetEnt, Red Tiger, Big Time Gaming. Many of the slots we run in demo every day sit under one corporate roof: Evolution, listed on the Stockholm stock exchange in Sweden. This summer, a rather unusual fight broke out over who owns the company.
Once you pass 30%, an obligation kicks in
On July 24, an investment company called Candle Lake Limited bought another 2.05 million Evolution shares on the open market. That brought its stake to 30.02%. Candle Lake is controlled by Kenneth Dart, a US investor based in the Cayman Islands.
Under Sweden’s takeover rules, when a shareholder passes 30% of the voting rights, it must make an offer to buy the shares of all remaining shareholders. The idea is that a party holding a stake large enough to influence control should give minority shareholders a chance to exit as well. Candle Lake announced this mandatory tender offer on August 13.
695 kronor per share, below the market price
The offer price is 695 kronor per share, in cash. Based on 189.45 million outstanding shares, that values the whole company at roughly 131.7 billion kronor, and counting only the shares Candle Lake does not yet own, the offer is worth about 90.1 billion kronor. It said the funds were financed entirely from cash on hand.
The issue was the price. 695 kronor equals the closing price on July 24, when the stake passed 30%. But the closing price on August 12, just before the tender offer was announced, was 737.2 kronor. The offer was 5.7% below the market price. Compared with the average of the last 20 trading days, it was a 3.3% discount.
| Benchmark | Price | Compared with 695 kronor |
|---|---|---|
| July 24 closing price | 695 kronor | Same |
| 20-day average to July 24 | 683.8 kronor | 1.6% higher |
| August 12 closing price | 737.2 kronor | 5.7% lower |
| 20-day average to August 12 | 718.8 kronor | 3.3% lower |
Candle Lake described Evolution as “a well-managed and highly profitable company.” It said it has no plans to materially change business operations, management, or employment terms for staff. It added, however, that if its stake exceeds 90%, it would delist the company from Nasdaq Stockholm and turn it into a private company.
Kenneth Dart is an investor from the family behind US packaging company Dart Container, widely known for his bond and stock investing. He is also a long-term investor who has steadily built up his Evolution stake. This 30% crossing is less a sudden hostile takeover than the result of shares he kept accumulating passing the line set by law.
The board says “do not accept”
On August 24, Evolution’s board issued its official position, recommending that shareholders not accept the tender offer. It is no surprise that a board opposes an offer below the market price. The acceptance period was set from August 17 to around September 15.
Result: 0.06%
On September 16, Candle Lake announced the results. During the acceptance period, 111,716 shares, or 0.06% of the total, were tendered. The market effectively ignored the offer. With no reason to hand over shares for less than the market price, the result was close to expected. The tender offer was declared unconditional and wrapped up.
Candle Lake’s direct holdings remain in the 31% range, far from the 90% delisting threshold. After the results announcement, Nasdaq Stockholm removed the observation status that had been attached to Evolution. On September 19, when news came that the tender offer had become unconditional, Evolution’s share price fell 3.8% in a day.
What does it mean for slot fans?
Nothing changes right away. The company stays listed and the management stays the same. Candle Lake itself said it has no plans to change operations. It will not affect the release schedule for new games from Nolimit City or NetEnt.
Still, the fact remains that there is now a largest shareholder with a stake in the 30% range. Evolution has had a string of major events this year, including a 4.75 million pound settlement with the UK Gambling Commission, the collapse of its Galaxy Gaming acquisition, and the launch of a North America-only slot brand. The UK matter is covered separately. How this largest shareholder’s voice will play into the company’s future decisions is something to watch.
Source: Evolution official disclosure · iGaming Business