Finance

UK CMA to probe Evolution’s NetEnt acquisition

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The UK’s Competition and Markets Authority (CMA) is to investigate Evolution Gaming’s proposed acquisition of NetEnt, over concerns that the merger could lead to a reduction in competition in the British igaming market.

Evolution in June tabled a bid worth SEK19.6bn (£1.73bn/€1.88bn/$2.21bn) for casino games developer NetEnt, in a deal it said signalled its intent to become “the world leader in the online gaming industry”.

However, the CMA has stepped in to establish whether the merger will result in a “substantial lessening of competition” in the UK market.

The CMA opened its inquiry today (22 September) and has invited any interested parties to give comment on the proposed acquisition agreement until 5 October.

The Authority will analyse this feedback and announce whether the investigation will proceed to a second phase on or before 16 November.

Upon announcing the investigation yesterday, Evolution shares dropped from an opening price of SEK595.40 to as low as SEK567.20, before closing at SEK574.40. However, the price continued to recover today, trading up 1.47% at SEK580.20 per share at the time of writing.

It was a similar story for NetEnt, which began the week with shares trading at SEK76.50, but closed yesterday at SEK74.00. NetEnt’s shares are trading up 1.37% at SEK74.00 per share in Stockholm on Tuesday (22 September) morning.

Stockholm-listed Evolution’s offer for NetEnt amounts to SEK79.93 per share, which represented a premium of 43% over NetEnt’s closing price on Nasdaq Stockholm at the time.

At the time of the offer, Evolution said that shareholders owning around 20% of NetEnt shares indicated they would accept the offer, while the board of directors also unanimously recommended other shareholders back the bid.

In addition, board members who in total directly or indirectly control 8.48% of shares and 23.20% of votes in NetEnt expressed they intended to undertake to accept the offer.

NetEnt chairman Mathias Hedlund also welcomed the offering and said that the combination of his group’s reach in online slots and Evolution’s live casino product would give it greater leverage in expanding markets, such as North America.

Prior to the CMA launching its investigation, Evolution said it had hoped to complete the acquisition by 2 November this year.

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