Kenneth Dart’s investment firm Candle Lake has launched a mandatory takeover offer for Swedish online casino technology company Evolution after increasing its ownership stake above the level that triggers takeover obligations under Swedish regulations.

The Cayman Islands-registered investment vehicle offered SEK695 per share, valuing Evolution at approximately SEK131.7 billion ($13.8 billion). The offer follows Candle Lake’s disclosure last month that it held more than 30% of Evolution’s shares and voting rights, requiring it to make an offer for the remaining shares or reduce its position below the threshold.

The proposed price represents a discount to Evolution’s recent market value. The company’s shares closed at SEK737.20 before the announcement, making Candle Lake’s offer approximately 5.7% lower than the previous closing price. Evolution shares were down around 1% in Stockholm following the announcement.

Candle Lake said the offer was made to comply with mandatory bid requirements and confirmed that it does not intend to acquire the entire company.

Candle Lake Describes Evolution Stake As Long-Term Investment

Candle Lake currently owns or controls 31.56% of Evolution, while additional exposure through cash-settled total return swaps brings its overall financial exposure to 32.04%. The investment company said its holding represents a long-term financial investment and that it recognizes Evolution’s position as a major provider of live casino technology.

In its statement regarding the offer, Candle Lake said: “Candle Lake is a long-term investor and views its shareholding in Evolution as a financial investment in a well-managed, highly profitable business.”

The company added that it does not currently plan material changes to Evolution’s operations, strategy, management structure or workforce.

“The offer is, however, not motivated by any intention to acquire all outstanding shares in Evolution.”

Candle Lake also stated that the proposal would not affect Evolution’s operational sites, employees or employment conditions.

The offer document is expected on August 14, with shareholders able to accept the proposal between August 17 and September 15. Completion remains subject to any required regulatory approvals.

Analysts View Bid As Regulatory Requirement

Analysts have suggested that Candle Lake’s offer appears primarily connected to Sweden’s takeover rules rather than an immediate attempt to take full ownership of Evolution.

As Reuters reports, James Wheatcroft, an analyst at Jefferies, said:

“Candle Lake’s bid below the current share price is designed to fulfil stock exchange requirements, rather than a desire to own all the outstanding shares in Evolution. The bid does seem to imply that Candle Lake would like to own more shares in Evolution.”

Jefferies said Candle Lake may expect limited shareholder participation in the offer, after which the investment firm could potentially increase its stake without triggering another mandatory bid under the applicable rules.

If Candle Lake eventually acquires more than 90% of Evolution, it could seek compulsory redemption of remaining shares and pursue a delisting of the company from Nasdaq Stockholm.

Evolution was founded in 2006 by Jens von Bahr, Fredrik Österberg and Richard Hadida. The company develops and licenses casino software used by online gaming operators.

Dart Expands Presence In Gambling Sector

The Evolution offer adds to Kenneth Dart’s growing presence in the gambling industry. The billionaire investor has increased exposure to gaming companies after reducing significant positions in major tobacco businesses.

Through Candle Lake, Dart is also a major shareholder in Flutter Entertainment, the operator behind brands including Paddy Power, FanDuel and Betfair. FactSet data cited in the reports shows Dart holds an 18.6% stake in Flutter.

A similar situation could emerge if Dart increases his Flutter position beyond the 30% threshold, as the company is subject to Irish takeover regulations.

Evolution has recently faced regulatory attention in the United Kingdom. The company agreed to a £4.75 million settlement with the UK Gambling Commission after the regulator found that some of its games had been accessible to British customers through unlicensed operators. Evolution said it ended agreements with two operators connected to six unlicensed websites offering its content to UK players.

Evolution CEO Martin Carlesund previously said:

“We do not want traffic from unlicensed operators and will always move quickly to address any such situation.”

Evolution declined to comment on Candle Lake’s takeover proposal.