Online gambling operator Entain, formerly known as GVC Holdings, earlier this month tabled an offer worth £250m (€281.1m/$339.4m) to acquire Enlabs.
This cash offer, which is supported by the Enlabs board, equated to an SEK40 per share deal. Shareholders holding 42.2% of Enlabs’ shares have also undertaken to accept the offer.
However, Alta Fox Capital Management, which currently owns 2,332,625 shares in Enlabs, representing 3.34% of total shares in the business, said it does not plan to tender any shares at the current offer price.
Alta Fox said it has the support of a number of other minority shareholders, including Topline Capital, which holds 2.44% of shares in the operator.
Private investors Hans Isoz, Jimmy Jonsson and Ludwig Pettersson, who hold 2.58%, 1.71% and 0.63% of Enlabs’ shares respectively, have also voiced their opposition to the proposal, Alta Fox said.
“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,” Alta Fox said.
“The fact that 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.”
Alta Fox, which has retained legal counsel as part of the process, has instead put forward an alternate proposal, calling for Entain to pay SEK55 for each Enlabs share, which would value Enlabs at approximately £337.6m.
The investor added that if Entain would not meet this asking price, Enlabs should remain a standalone entity.
“Alta Fox confidently believes we have the support to block a squeeze-out of minority shareholders, legal counsel to ensure their fair treatment under Swedish law, and the determination to obtain a fair price that is reflective of Enlabs’ standalone growth prospects,” Alta Fox said.
At the time of writing, Enlabs’ shares were trading at SEK43.2 per share.