Evolution’s board has recommended that shareholders reject Candle Lake’s SEK695-per-share cash offer, arguing the mandatory bid doesn’t reflect the live casino supplier’s fair market value. The recommendation came out on Aug. 24, 11 days after billionaire Kenneth Dart’s investment vehicle formally offered to buy the Evolution shares it doesn’t already own.
Candle Lake valued Evolution at approximately SEK131.7 billion ($13.8 billion) when it launched the offer on Aug. 13. Its SEK695 price matched Evolution’s closing share price on July 24 and worked out to a 1.6% premium against the previous 20-day volume-weighted average, but it was already 5.7% below the SEK737.20 close immediately before the offer was announced.
Evolution shares have pulled further away from the bid since then, closing Aug. 21 at SEK820 after gaining almost 9% across the week. That left the stock roughly 18% above Candle Lake’s offer before the board published its recommendation, and shares were trading around SEK824 on Monday. Anyone accepting SEK695 would be selling considerably below the market price.
The board said its assessment took in Evolution’s current share price, financial and strategic position, expected development, and the risks and opportunities facing the company. It also noted Candle Lake’s own statement that the offer exists because Swedish takeover rules required it, not because Dart wants to acquire every outstanding Evolution share.
Candle Lake triggered that obligation on July 24 by increasing its direct ownership to just over 30% of Evolution’s shares and voting rights. Swedish takeover law gives an investor crossing the 30% threshold two options: offer to buy the rest of the company, or reduce the stake. Candle Lake controlled 59.8 million shares by the time the bid was announced, equal to 31.56% of Evolution’s outstanding stock.
The offer stays open despite the recommendation. Shareholders have until Sept. 15 at 5pm CEST to accept under the current timetable, with settlement expected to begin around Sept. 23, and Candle Lake can extend or shorten the acceptance period within the limits of Swedish takeover rules.
Candle Lake has said it doesn’t currently plan material changes to Evolution’s operations, strategy, management, employees, or operating locations. Evolution’s board said it had no reason to challenge those statements, which leaves price rather than operational concerns as the central reason for telling shareholders to keep their shares.
Dart could still end up with greater control even if the offer attracts little interest. Candle Lake has said that should its ownership exceed 90% through the offer or later purchases, it intends to begin compulsory redemption proceedings for the remaining shares and seek to delist Evolution from Nasdaq Stockholm. With the shares trading well above SEK695, getting to that threshold through the existing bid would require a substantial number of investors to accept less than the market price.
Evolution has also kept buying back its own stock while the offer runs. The company purchased 972,212 shares between Aug. 10 and 14, taking its treasury holding to almost 11.8 million shares, or 5.92% of the total issued stock at that point. Treasury shares carry no voting rights, so the repurchases have slightly increased Candle Lake’s effective voting position without Dart buying anything.
The recommendation formalizes what Evolution’s share price had been saying since the bid was announced. Candle Lake was required to make an offer after crossing Sweden’s ownership threshold, set that offer below the prevailing market price, and explicitly said it wasn’t pursuing a full takeover. Unless it raises the price or Evolution shares fall sharply before Sept. 15, shareholders have little financial incentive to accept SEK695.