January 18, 2021 3 min read


Alta Fox Capital Would Block Entain’s Bid for Enlabs

Entain’s £250 million bid for Baltic gaming operator Enlabs AB is on the verge of collapsing after a second large shareholder of the Stockholm-listed company vowed to block the deal, EGR reports. Alta Fox Capital Management, a hedge fund holding 3.34% stake in Enlabs stated it would reject the purchase at the proposed price.

Bid Accepted by 42% of Shareholder Capital

Earlier in the month, FTSE100-traded gaming group Entain tabled through its wholly-owned subsidiary Bwin Holdings an offer of SEK40 per share to acquire 90% of the shares of Enlabs and the offer has already been accepted by shareholders representing 42% stake in the company, including Enlabs chairman Niklas Braathen and senior board member Christian Haupt.

Initially, Hans Isoz aired his concerns that the proposed price did not provide enough incentives for shareholders to part with their stakes, urging Entain to improve the proposal, and now, Alta Fox is joining the choir.

“This offer materially undervalues the company, represents a negligible premium of 1.1% to the pre-offer trading price and has unusual circumstances that make us question why Enlabs Chairman Niklas Braathen accepted such an inadequate offer.”

Connor Haley, Managing Partner, Alta Fox Capital Management

Will Braathen Be the Next CEO of Entain?

What concerns minority shareholders is not the fact that Entain would keep Braathen in his current role if they acquire Enlabs, but that Braathen would invest €15 million (£13.5 million) from the money he would receive from Entain for his Enlabs shares into Entain shares via a family holding company, Erlinghundra AB, within 4 months of the funds being received by Enlabs.

In addition, Shay Segev, chief executive officer of Entain surprisingly announced his decision to leave the gambling group after just 7 months in the position. The move came after Entain rejected an $11 billion takeover approach from its US partner MGM Resorts, but Segev, who would stay at Entain for 6 months or until the company finds a suitable replacement, claimed his decision to leave had nothing to do with the bid.

“The fact Entain will compensate Braathen as a senior executive post-deal and that the CEO of Entain just announced his departure is highly unusual. It leads us to conclude that while this is a good deal for Entain, it is a bad deal for Enlabs minority shareholders.”

Connor Haley, Managing Partner, Alta Fox Capital Management

Entain Would Not Reach 90%

Hans Isoz and Alta Fox would not be alone in rejecting Entain’s overtures as according to the hedge fund’s managing partner other shareholders representing 10.07% of the capital offered their support to block the proposal.

“If Entain wants to acquire Enlabs, a highly accretive and strategic asset, Entain must compensate Enlabs shareholders for its excellent growth prospects as a standalone entity.”

Connor Haley, Managing Partner, Alta Fox Capital Management

Connor Haley concluded by suggesting that Entain should offer SEK55 for a share to satisfy minority shareholders, a price which would offer more than 20% premium on the current market trading price around SEK45.

Lead Author

With 4 years experience as an analyst, Julie—or ‘Jewels’, as we aptly refer to her in the office—is nothing short of a marvel-worthy in her attention to the forex and cryptocurrency space as she quickly became the first pick to co-pilot education to the masses with Mike.

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