Billionaire investor Kenneth Dart has formally launched a cash offer for Evolution after pushing his stake in the live casino supplier past Sweden’s mandatory takeover threshold. The bid values Evolution at roughly SEK131.7 billion ($13.8 billion), though Dart’s investment vehicle has made clear it isn’t actually trying to acquire the whole company.
Candle Lake Limited, a Cayman Islands investment company wholly owned by Dart, is offering SEK695 in cash per Evolution share. The offer opened on Aug. 17 and is currently scheduled to stay available until Sept. 15, with settlement expected to begin around Sept. 23, after Sweden’s Financial Supervisory Authority approved and registered the offer document on Aug. 14.
SEK695 happens to be below where Evolution was trading immediately before the announcement. The price represented a 5.7% discount to Evolution’s SEK737.20 closing price on Aug. 12 and a 3.3% discount to its 20-day volume-weighted average, and it amounted to just a 1.6% premium against the 20-day average calculated when Candle Lake first crossed the takeover threshold in July.
Normal takeover bids involve paying a premium to persuade shareholders to sell, which is not what’s happening here. Candle Lake crossed the 30% voting-rights threshold on July 24 after buying another 2.05 million Evolution shares, and Swedish takeover rules then required it to either make an offer for the rest of the company or reduce its holding below 30%. Dart chose the former.
Candle Lake has kept buying since. It controlled 59.8 million Evolution shares by the time the offer was announced, equal to 31.56% of the outstanding stock, while an affiliated entity holds economic exposure to another 4.04 million shares through cash-settled total return swaps, bringing Dart’s combined financial exposure to roughly 32.04%. In the six months preceding the offer, Candle Lake bought more than 10.4 million Evolution shares.
Candle Lake says it considers Evolution a long-term financial investment and has no intention of buying the entire company, despite the size of the bid. It also has no plans for major changes to Evolution’s management, workforce, operating locations, or general strategy. The SEK90.1 billion potentially required to purchase every share it doesn’t already control is nevertheless fully financed through cash, liquid securities, and credit facilities.
Jefferies analyst James Wheatcroft read the below-market offer as mainly a way of satisfying Sweden’s takeover rules rather than a sign that Dart wants to privatize Evolution. Completing the mandatory process could also leave Candle Lake free to increase its holding further afterward, even if very few shareholders accept SEK695 while the stock trades above it.
One exception to that stated lack of takeover plans does appear in the formal terms. Should Candle Lake’s ownership eventually exceed 90%, it intends to begin compulsory redemption proceedings for the remaining shares and seek Evolution’s delisting from Nasdaq Stockholm. Getting there through the current offer looks unlikely unless shareholders suddenly develop an enthusiasm for selling below the market price.
Dart started building his Evolution position in mid-2024 and has increased it steadily since. The investment forms part of a wider move into gambling companies, as he has also accumulated a substantial position in Flutter Entertainment, owner of FanDuel, Paddy Power, and Betfair, following earlier large investments in industries including tobacco.
Evolution remains highly profitable, though its growth has slowed. Second-quarter revenue fell 1.2% year over year to €517.8 million, with EBITDA of €341 million at a 65.9% margin, while first-half revenue declined 1.4% to €1.03 billion. The company has also been dealing with increased cybercrime disruption in Asia, and it recently paid £4.75 million to settle a UK Gambling Commission investigation involving Evolution content appearing on six unlicensed gambling websites.
Evolution’s board still has to publish its formal opinion on the offer, with Swedish takeover rules requiring a statement no later than two weeks before the acceptance period expires. Unless the market price falls substantially before then, Dart’s bid looks less like an attempt to buy Evolution than the rather expensive paperwork required after becoming its dominant shareholder.