The cash offer, which would see Entain pay SEK40 for each Enlabs share, has been recommended by the Enlabs board, while shareholders holding 42.2% of the total Enlabs shares have also undertaken to accept the offer.
Enlabs predominantly operates online sports betting and igaming brands across the Baltics, while the operator also has a small retail presence in the region.
In November 2020, Enlabs completed its own acquisition of Global Gaming, which enabled it to extend its operations into the Nordics through brands including Optibet, Laimz and Ninja Casino.
Entain said the acquisition of Enlabs is directly aligned with its growth strategy of entering locally regulated markets where it does not yet have a presence.
The operator said Enlabs’ regional market and brand strength, combined with its own scale, proprietary technology, product, marketing and regulatory expertise, could further accelerate growth and expansion into new territories.
Should the acquisition go ahead, Entain said that it would retain the services of current Enlabs board chairman Niklas Braathen, in order to help to develop the group’s operations in the region and its expansion into new markets.
In addition, through a family holding company and subject to the offer being declared unconditional, Braathen has undertaken to invest €15m into shares in Entain within four months of receipt of the consideration under the offer.
Subject to regulatory approvals and Enlabs shareholders accepting the offer, the transaction is expected to complete before the end of the first quarter. Entain intends to fund the acquisition using existing cash resources.
“The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets,” Entain chief executive Shay Segev said. “We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities.
“Enlabs is already a strong and rapidly growing business in its own right, but we now have a fantastic opportunity to turbocharge its growth by leveraging the power of our unparalleled proprietary technology, scale, product and marketing expertise.”
Enlabs’ Braathen added: “When Entain’s interest to acquire Enlabs emerged, we instantly saw the strategic logic.
“Entain’s experience and track record in many different geographic markets, together with its market-leading proprietary technology and world-class marketing skills are key attractions for Enlabs as we look to grow in the Baltics and beyond.”
Meanwhile, Enlabs has published its preliminary results for the fourth quarter of 2020, during which it said revenue amounted to between €20.3m and €20.5m.
Preliminary adjusted earnings before interest, tax, depreciation and amortisation for the three months to 31 December is expected to be between €6.3m and €6.5m, corresponding to an adjusted margin of approximately 31% to 32%. Its full Q4 results will be published on 23 February.
Entain intends to announce trading for the fourth quarter and full year 2020 on 21 January.
The acquisition offer comes after Entain this week confirmed its US joint venture partner MGM Resorts International had put forward a proposal to potentially acquire the business.
MGM Resorts’ proposal offers 0.6 MGM shares for each Entain share, representing a value of 1,383 pence per Entain share, which in turn represents a 22% premium on Entain’s share price.
MGM Resorts has also since confirmed the offer, saying the proposal would value the Ladbrokes and PartyGaming operator at approximately $11.00bn. This, however, significantly undervalues the business, according to the Entain board.
Also this week, Enlabs announced it would voluntarily relinquish its Swedish online betting and gaming licences, as it plans to undertake “development work” on its platform before relaunching with new licences in the market.
Enlabs was issued a licence by regulator Spelinspektionen to operate betting and gaming through its flagship Optibet brand in Sweden in March 2020, but its services will now be unavailable until summer 2021, when Enlabs plans to launch several brands in the market.