Entain eyes Baltic opportunities with £250m Enlabs offer

Entain Plc has published the terms and conditions of its ‘recommended offer’ to Enlabs AB shareholders, as the FTSE100 gambling group seeks to expand its Baltic market footprint.

Updating the market, Entain has proposed a cash offer of SEK 40 per Enlabs share on the Nasdaq Nordic exchange, valuing its latest M&A target at SEK 2.8 billion (approximately £250 million). 

This offer represents a premium of 15.6% when compared to the weighted average price of each Enlabs share during the past 90 days, and 42.3% during the past 190 days.

The offer will be financed using Entain’s own cash resources, and is expected to add around 0.2 to Entain’s net debt to EBITDA ratio for 2021.

Enlabs’ board has approved the offer to shareholders, with company chairman Niklas Braathen underlining that Entain’s deal offered an ‘instant 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.  

“Entain’s experience and track record in many different geographic markets, together with its market-leading proprietary technology and world-class marketing skills are key attractions for Enlabs as we look to grow in the Baltics and beyond.  

“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.”

If the offer is finalised, Entain will become the owner of more than 90% of the shares in Enlabs, which is one of the largest betting operators in the Baltic region.

It is estimated that Enlabs will generate €89.5 million in net gaming revenue over the next year and EBITDA of €23.5 million.

Enlabs’ recent growth plays well into Entain’s own expansion plans. The Riga-based firm is the market leader in Latvia, the second largest betting operator in Estonia and one of the top five companies in Lithuania.

The company’s acquisition of Global Gaming in November 2020 enabled it to expand its brands and products into the Nordic countries, having also developed a presence in Eastern Europe.

Enlabs online gambling portfolio is led by its flagship brand ‘Optibet’ which operates in the Baltic and Scandinavian markets. 

“The acquisition of Enlabs is perfectly aligned with our strategy of expanding across new regulated international markets.  We are hugely excited by the growth opportunities it presents both in its existing markets and through new market opportunities,” stated Entain Group CEO Shay Segev.

“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.” 

In its footnote, Entain confirmed that Braathen will continue to support the company in developing group operations and offering guidance on sustainable growth across the Baltic region. 

If the transaction is completed successfully, Braathen will in turn invest EUR 15 million in Entain’s shares within four months.

The FTSE100 group stated that the transaction was in line with the corporate objectives of its new charter, in which the group seeks to generate all corporate revenues from regulated markets by end of 2023 trading. 

The transaction is expected to be completed in the first quarter of 2021, subject to regulatory approvals being obtained as well as the approval of Enlabs shareholders.

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