Enlabs: Bid on Enlabs

Today Entain plc, previously GVC Holdings plc, has made a public offer to acquire Enlabs at SEK 40 share, which is spot on our latest fair value of Enlabs. We also saw Enlabs as a potential acquisition target, which also the market probably did as well. As a result, an acquisition was likely partly included in the share price before the bid. However, given the synergy opportunities, we expected that Entain plc would be willing to offer a more significant premium than 1%.

It should, however, be noted that the offer represents a premium of 42% compared to the volume-weighted average price during the last 180 trading days and a premium of 16% compared to the volume-weighted average price during the last 90 trading days. The Independent Bid Committee of Enlabs AB also states that the premium was 87% compared to the share price on 20 February 2020, which was the last trading day before the Board of Directors of Enlabs received the first indicative bid letter from Entain.

In conjunction with the public offering Enlabs also publishes preliminary results for the fourth quarter of 2020. The preliminary revenues came in line with our estimates, while the adjusted EBITDA came in around 14% above our estimates. Without any further details about investments in marketing etc. it is challenging to say if the result is good or not. However, based on the information we have, it would be more likely that we would increase the fair value of Enlabs than decrease it.

In conclusion

We find the bid premium somewhat low given synergy opportunities. But the offer does overall reflect the fair value of Enlabs. Furthermore, the offer has already been accepted by several larger shareholders holding shares corresponding to 42.2% of the total shares in Enlabs.