Evolution’s board has recommended that shareholders reject Candle Lake Limited’s SEK695-per-share mandatory cash offer, saying the proposal does not adequately reflect the company’s value.

The bid values Evolution at approximately SEK131.7 billion and follows Candle Lake’s increase in its stake above the 30% threshold that triggers a mandatory offer under Swedish takeover rules. Candle Lake, the investment vehicle of billionaire Kenneth Dart, announced the bid on August 13. The acceptance period began on August 17 and is expected to end around September 15.

In reaching its decision, Evolution’s board considered the company’s share price, strategic and financial position, expected development, and related opportunities and risks.

“Based on its assessment, and in light of the discount in offer compared to the Company’s current share price, the board of directors considers that the Offer does not reflect the fair market value of Evolution.”

Offer Trades Below Evolution’s Market Price

Candle Lake’s SEK695 offer matched Evolution’s closing price on July 24, the last trading day before the investment vehicle announced that it had crossed the mandatory bid threshold.

At that point, Candle Lake held approximately 30.02% of Evolution’s shares and votes. The offer represented a 1.6% premium to the volume-weighted average trading price of SEK683.8 over the preceding 20 trading days.

The market value had increased considerably by the time Candle Lake announced its offer. Evolution closed at SEK737.2 on August 12, leaving the SEK695 bid 5.7% below that price. The offer was also 3.3% below the 20-day volume-weighted average of SEK718.8 through August 12.

Evolution cited the discount as a central reason for its rejection.

The board also noted that Candle Lake has previously said the offer does not reflect an intention to acquire every outstanding share in Evolution. According to SBC News, the proposal instead resulted from the mandatory bid requirement triggered by its increased ownership.

“The board of directors also notes that Candle Lake has expressed that the offer is not motivated by any intention to acquire all outstanding shares in Evolution and that the offer is made pursuant to Candle Lake’s mandatory offer obligation.”

The offer is subject to any required regulatory, governmental or similar approvals. Candle Lake has said it currently expects the necessary customary clearances to have been obtained and believes the transaction can be completed after the acceptance period without extending it.

Full Takeover Remains Possible

Candle Lake has previously indicated that it could pursue compulsory acquisition of the remaining Evolution shares if its holding exceeds 90%. It has also said it would seek to delist Evolution from Nasdaq Stockholm.

For now, however, the company’s board has advised investors to reject the existing proposal.

Dart’s investment vehicle has continued building positions across the gambling sector. Candle Lake controls approximately 29% of Flutter Entertainment and holds a 0.6% stake in Hacksaw Gaming, which is also listed on Nasdaq Stockholm.

The investment vehicle recently acquired 5.8% of US gambling operator DraftKings. Its position in Evolution remains its largest disclosed holding among the companies mentioned in the supplied material.

Evolution said Candle Lake has stated that it does not currently plan material changes to the company’s operations, sites, management or employees, including their employment terms.

The board said in a press release it assumes those statements are accurate and has no reason to take a different view.

Evolution has appointed Gernandt & Danielsson Advokatbyrå as its legal adviser for the offer.

The mandatory bid followed Candle Lake’s July announcement that its direct holding had reached approximately 30.02%. Swedish takeover rules require a shareholder that crosses the 30% threshold to make an offer for the remaining shares.

Candle Lake published its offer document on August 14, with shareholders given until around September 15 to decide whether to accept.