Enad Global 7 stock jumps after US activist investor pushes for sale
22/05/2023 18:11
NEW YORK, May 22 (Reuters) - Enad Global 7 AB's EG7.ST
stock price jumped 5% on Monday after U.S. activist investor
Alta Fox urged the Swedish video game company to explore
strategic options, including a possible sale.
Alta Fox asked EG7's board to "expeditiously" address the
company's trading discount and forecast that a sales process
plus other changes "could unlock more than 100% in near-term
upside for EG7 shareholders," according to a letter made public
on Monday.
Alta Fox, which owns 6% of EG7 and made headlines last year
by running a board room challenge at toymaker Hasbro HAS.O , is
worried the market is not valuing the company properly despite
positive steps taken by management.
"EG7 is a high-quality business that remains dramatically
undervalued due to no fault of current leadership," Alta Fox's
managing partner Connor Haley wrote.
A representative for EG7, which has game development
divisions Daybreak Games and Big Blue Bubble, did not
immediately respond to a request for comment.
Previous management's missteps and the fact that it is not
well known outside of Sweden are hurting the company, the letter
said.
The hedge fund suggested the company, whose stock is listed
in Sweden, should relist in the United States in order to buy
back shares. It also suggested management should promise to pay
a recurring dividend, saying the company could pay "a 10%+
dividend on the current share price while still properly
reinvesting and maintaining a net cash balance sheet."
Most urgently though, Alta Fox wants to see a formal review
process, including a possible sale of the entire company, which
it expects could attract several potential acquirers willing to
pay a considerable premium.
($1 = 10.56 Swedish crowns)
(Reporting by Svea Herbst-Bayliss; Editing by Conor Humphries)
((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))