The Competition and Markets Authority (CMA) announced today it launched an inquiry into the proposed takeover bid of NetEnt AB by Evolution Gaming AB. The governmental body is concerned the acquisition could led to reduced competition in the iGaming market in the UK.
The CMA technically opened the inquiry a day before the announcement as it sent both parties a notice that an investigation into the proposed merger will commence. In June, Evolution Gaming tabled a bid, equivalent to £1.68 billion for 90% of the shares of NetEnt, looking to become the new online B2B casino giant.
Shares in Exchange for Shares
The proposed price did not include cash as the payment will be done through Evolution shares, 0.1306 in exchange for one NetEnt share. Such a payment implies a consideration of current share price of the paying company and a closer look at the market. Despite, by that time NetEnt’s board of directors established the proposed price represented a 0.43 premium per share and recommended to all shareholders to accept the proposal and sell their shares in the slot and table games developer.
“The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”Official statement
CMA Invited Comments
As part of the phase 1 launched investigation and to assist it with the assessment, the CMA informed all interested parties that they can submit comments regarding the transaction until October 5. From then on, the CMA will analyze the feedback and assess whether the inquiry into the proposed acquisition would need to proceed to a second phase. The competition body will have until November 16 to come up with the results of the assessment.
The probe launched by the CMA threw a spanner into Evolution’s timetable for completing the deal. Prior to the investigation, the acquiring company was hoping to complete the deal by November 2. Evolution and NetEnt already conducted their due diligence into the other company’s operations, looking to speed up the acquisition, but it seems they would have to wait until mid-November, at least.