Entain targets Baltic expansion with £250m Enlabs bid
FTSE 100 operator increases full-year 2020 EBITDA estimate after executing bolt-on M&A strategy
Entain has submitted a SEK2.80bn (£250m) all-cash offer to acquire Latvia-headquartered online gambling operator Enlabs as it seeks to build up a presence in the Baltic markets.
The offer values Enlabs shares at SEK40, a premium of approximately 15.6% of its volume-weighted average price during the last 90 days of company trading.
Enlabs’ board of directors, as well as shareholders accounting for 42.2% of the company’s total share capital, have said they will accept the offer. An independent bid committee has also reviewed the Entain offer and likewise given its ascent to the bid.
“The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets,” said Entain CEO Shay Segev. “We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities.
“Enlabs is already a strong and rapidly growing business in its own right, but we now have a fantastic opportunity to turbocharge its growth by leveraging the power of our unparalleled proprietary technology, scale, product and marketing expertise,” Segev added.
Enlabs is based in Riga and operates significant operations in the Baltics, particularly in Latvia and Estonia through its Optibet sports betting brand.
In December, the group voluntarily surrendered its Swedish online gambling and sports betting licence to focus on product improvements and technical changes, ahead of reapplying for a Swedish licence in summer 2021.
The firm is still fresh from completing its own M&A activity, having secured a SEK150m takeover of former Swedish-licensed operator Global Gaming in December 2020.
Entain confirmed existing Enlabs chairman Niklas Braathen will stay on after the takeover completes.
In addition, it is understood Braathen will invest €15m (£13.5m) in Entain shares via a family holding company within four months of the acquisition funds being received by Enlabs.
“When Entain’s interest to acquire Enlabs emerged, we instantly saw the strategic logic,” Braathen said.
“Our interaction with them so far has confirmed that they will provide an excellent home for the company, its customers and employees.
“Finally, Enlabs has achieved an enormous amount as an independent business, but we recognise the established trend of industry consolidation and the growing importance of scale,” he concluded.
Completion of the deal is expected to take place in Q1, subject to regulatory approval.
Based on analyst consensus for the year to 31 December 2021, Enlabs is estimated to generate net gaming revenue of €89.5m and EBITDA of €23.5m.
As a result of the deal, Entain’s full year 2020 EBITDA is now expected to be in the range of £825m-£845m, representing an increase of 6-8% compared to Q3 guidance.
On 22 December 2020, the operator received £217m from HMRC in settlement of historical tax claims to boost its cash position.