Fortuna Entertainment Group has announced that it has reached an agreement with Fortbet Holdings Limited, its majority shareholder, in relation to a takeover bid for the company.
Fortbet, a subsidiary of the Central European investment group Penta Investments, currently owns a little under 80% of the firm, but is now bidding for full control after raising its stake from 68% last year.
Fortuna details that an indicative offer of 170 Czech Koruna (CZK) was made at the beginning of December, which, following discussions, Fortbet agreed to raise.
The current offer of CZK 182.50 would value Fortuna at CZK 9.49B ($447.83 million).
In a statement Fortuna stated: “After careful consideration of the strategic rationale, the financial aspects and consequences of the offer, the Boards believe that Fortbet offers a fair price, and believes that acceptance of the offer is in the best interest of Fortuna, the success of its business and its stakeholders.”
Adding: “The Boards fully support and recommend the offer for acceptance to the holders of the Shares, and also recommend voting in favour of Fortuna making the delisting application.”
As part of the current offer, a delisting of shares from both the Prague Stock Exchange (PSE) and Warsaw Stock Exchange (WSE) would have to take place, which it is believed would be beneficial for the company.
In its statement Fortuna detailed five advantages which it believes will occur as a result of a delisting from the PSE and WSE as being:
- Release Fortuna from its public disclosure obligations, which are currently a significant disadvantage as Fortuna’s major competitors are private companies that are subject to less extensive and transparent reporting requirements, but are able to benefit from the information publicly shared by Fortuna and thus compete more effectively with Fortuna;
- Eliminate the regulatory and compliance aspects associated with a listing, which impose a significant financial and management burden on Fortuna which is not sufficiently compensated by benefits that are often associated with a listing (such as market profile or improved access to capital and investors);
- Enable Fortuna, as an unlisted company with no public disclosure requirements, to more easily take advantage of market opportunities and to adopt a more aggressive acquisition strategy;
- Allow an increased focus on long-term goals instead of the short-term goals often encouraged in a public markets context;
- Enable Fortuna to realise cost savings, given the costs associated with maintaining the dual listing.
Marek Smrha, Investment Manager and Penta Investments, is set to speak at SBC’s upcoming Betting on Football conference, due to be held at Stamford Bridge, the home of Chelsea FC, on May 20-23. On Day 2 (Thursday 22 March) in the Drake Suite, Smrha is set to feature on the Investment Panel, titled “where is the attractive risk?” More information about the event can be found at this link.