Interactive

Sweden – NetEnt board of directors recommend Evolution Gaming takeover bid

By Lewis - 24 June 2020

NetEnt’s board of directors has recommended a takeover bid by Evolution Gaming to its shareholders. The proposed transaction sees Evolution offer 0.1306 shares for each share in NetEnt, valuing each at SEK 79.93 and all shares in the firm to approximately SEK 19.6bn.

In its evaluation of the offer, the board of directors has outlined a number of factors in its recommendation including NetEnt’s present strategic and financial position, prevailing market conditions, operational opportunities and challenges, expected future development, and the valuation.

Evolution Gaming has confirmed that it will not increase the offer and that the price in the offer is final under takeover rules. The acceptance period for the offer is expected to commence on or around 17 August 2020 and expire on or around 26 October 2020, subject to any extensions.

“This strategic acquisition is an important part of Evolution’s long-term vision to become a market leader in the global online gaming industry,” explained Jens von Bahr, Chairman of the Board at Evolution Gaming. “The combination of Evolution’s strong offering in live casino and NetEnt’s leading position in online slots will result in a portfolio of world-class online games that will enable us to serve a growing customer base.

“In addition, the combination of NetEnt’s established position in North America and Evolution’s existing studios in the US and our so-called first to regulated market strategy will put us in an advantageous position to capitalize on the ongoing regulation in North America.”

The board of directors, as part of its process to evaluate the offer in line with its fiduciary duties, has said that it has investigated other opportunities in light of the approach by Evolution Gaming, but that the offer on the table is the best current option.

“In recent years, NetEnt has improved its tech and product development capabilities and thereby its growth potential while at the same time achieving a strong position in the states of the US that have opened up for online casinos,” explained Mathias Hedlund, Chairman of the Board at NetEnt. “Through this transaction, unique opportunities are created to form a leading B2B supplier in online casinos and take full advantage of the market developments with continued digitalisation and strong growth, especially in North America.

“With Evolution’s position in live casino and NetEnt’s position in online slots, the merged company will be well positioned to capture significant market shares. This transaction will start a new chapter in the development of more entertaining online casinos for the benefit of players, operators, staff and shareholders.”

The recommendation of the board of directors cited a number of strategic benefits to NetEnt from combining its operations with Evolution Gaming, including a substantial increase in scale; becoming a leading supplier of online casino products within live and slots; leveraging Evolution Gaming’s strong market position, particularly in the United States; enhanced client and product diversification; a basis for new and innovative products to the benefit of customers and end-users; and the offer representing a significant premium to the prevailing NetEnt share price.

Addressing any potential impact for employees at the two companies, Evolution Gaming added: “Evolution is confident that it will be able to build a strong group together with NetEnt’s senior management and employees. Evolution recognises the value of NetEnt’s senior management and other employees and appreciates that their talent and dedication have been, and will continue to be, integral to NetEnt’s and the combined group’s success.

“Evolution does not currently foresee that the combination of the companies will have any material impact on Evolution’s or NetEnt’s respective employees, including their terms of employment or the locations where the companies currently operate. Following the completion of the offer, Evolution intends to carry out a careful review of the combined business in order to evaluate how Evolution can organise and develop the group in the best possible way.”

Completion of the offer is subject to customary conditions, including regulatory clearances being obtained and the offer being accepted to such extent that Evolution Gaming becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares in NetEnt on a fully diluted basis. Evolution Gaming has reserved the right to waive one or several of the conditions, including to complete the offer at a lower level of acceptance.