REG - Entain PLC - £250m Offer for Enlabs AB

EntainAnnouncement

07/01/2021 07:14

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RNS Number : 9012K  Entain PLC  07 January 2021

7 January
2021

Entain plc

("Entain" or the "Group")

 

Entain extends into the Baltic Markets with £250m Offer for Enlabs AB

Full year expectations upgraded

 

Entain plc (LSE: ENT), the global sports-betting and gaming group, formerly
known as GVC Holdings, has today announced a recommended cash offer for Enlabs
AB ("Enlabs" or the "Company").  The acquisition further delivers on Entain's
strategy of expansion across new regulated international markets.

 

Highlights

·      A recommended cash offer of SEK 40 for each Enlabs share

·      This values Enlabs at around SEK 2.80 billion (approximately
£250 million) ((1))

·      The offer represents a premium of approximately 15.6% and 42.3%
compared to the volume-weighted average price of an Enlabs share during the
last 90 and 180 trading days prior to the announcement of the offer,
respectively

·      The offer has been recommended by Enlabs' board, and shareholders
holding in aggregate approximately 42.2% of the total number of Enlabs shares
have undertaken to accept the offer

·      Enlabs is an established and leading gaming company operating in
fast-growing markets across the Baltics, with further growth opportunities
across Eastern Europe and the Nordics

·      Based on analyst consensus((2)) for the year to 31 December 2021
Enlabs is estimated to generate net gaming revenue of €89.5m (c.£80.5
million) and EBITDA of €23.5m (c.£21.1 million) ((3))

·      The acquisition is expected to be earnings accretive in Entain's
first full year of ownership

·      Full year 2020 EBITDA is now expected to be in the range of
£825m to £845m, representing an increase of 6-8% compared to Q3 guidance

 

Delivering Entain's growth strategy

Enlabs predominantly operates online sports-betting and gaming brands across
the fast-growing Baltic region with a small retail presence.  It is the
market leader in Latvia, the second largest in Estonia and a top-five operator
in Lithuania.  In November 2020 Enlabs completed the acquisition of Global
Gaming, which enables Enlabs to extend its operations into the Nordics through
successful and proven gaming brands, including Optibet, Laimz and Ninja.

 

The acquisition of Enlabs is directly aligned with Entain's stated growth
strategy of entering locally regulated markets where it does not currently
have a presence.  The Group believes that Enlabs' regional market and brand
strength combined with Entain's scale, proprietary technology, product,
marketing and regulatory expertise can further accelerate growth and expansion
into new territories - both through Enlabs' brands as well as by leveraging
Entain's existing brands.  The Group also expects to deliver synergy benefits
through economies of scale, sharing of best practices and removal of Enlabs'
public company costs.

 

Enlabs has a strong management team led by Niklas Braathen, who has been
instrumental in driving the rapid growth of the business over the last seven
years.  Entain will retain the services of Niklas to develop the Group's
operations in the region and its expansion into new markets.  Furthermore,
through a family holding company and subject to the offer being declared
unconditional, Niklas has undertaken to invest EUR 15 million into shares in
Entain within four months of receipt of the consideration under the offer.
The holding company has undertaken not to sell or otherwise dispose of such
shares before 31 December 2023.

 

Timing and financing

The transaction is expected to complete in Q1 2021, subject, inter alia, to
requisite regulatory approvals being obtained and sufficient Enlabs
shareholders accepting the offer such that Entain becomes the owner of shares
in Enlabs representing more than 90% of the total number of Enlabs shares (on
a fully diluted basis).  Further details of the offer, including conditions
relating to completion, are contained in the offer announcement issued
separately this morning, a copy of which is available at www.entaingroup.com.

 

Entain will finance the cash consideration of approximately £250 million from
its existing cash resources.  It is expected that the acquisition will add
approximately 0.2x to Entain's net debt to EBITDA ratio for 2021.

 

Shay Segev, Entain's CEO, commented:

"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.  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."

 

Niklas Braathen commented:

"When Entain's interest to acquire Enlabs emerged, we instantly saw the
strategic logic.  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."

 

Current trading

Entain will announce trading for the fourth quarter and full year 2020 on 21
January 2021.  However, following continued strong performance through the
final quarter of 2020 and despite the adverse impact of localised lockdowns on
our Retail business, full year 2020 EBITDA is now expected to be in the range
of £825m to £845m, representing an increase of 6-8% compared to Q3 guidance.

 

On 22 December 2020 the Group received £217m from HMRC in settlement of
historical tax claims.  In combination with the strong EBITDA performance,
year-end net debt to EBITDA for the financial year to 31 December 2020 is
expected to be approximately 2.1x.

 

Conference call

An analyst call will be held at 9:00am (GMT) today. Participants may join the
call by dialling one of the following numbers approximately 15 minutes before
the start of the call:

To participate in the Q&A, please also connect via the conference call
dial in details.

UK +44 33 0606 1122

US +1 646 813 7960

Room number: 133775

Participant PIN: 6876

 

There will be a live audio webcast available via the following link:

https://brrmedia.news/wd9nj
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrrmedia.news%2Fwd9nj&data=04%7C01%7CDavid.Lloyd-Seed%40entaingroup.com%7C2856c092def04662b2ef08d8b1a4a259%7C60c43c0a64ac4050bf3e31e1cdfffdeb%7C0%7C0%7C637454668098828473%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=%2FtURKQ%2Ftl6AZzWK94oKyy%2Br4nlJDqVGBWkW0YD8hXLA%3D&reserved=0)
 

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law
(as defined in the European Union (Withdrawal) Act 2018).

 

The acquisition of Enlabs constitutes a class 2 transaction for the purposes
of the UK Listing Rules. For the purposes of LR 10.4.1 R (Notification of
class 2 transactions), as at 30 September 2020, the gross assets of Enlabs
were €90.6m and as at 30 June 2020 the gross assets of Global Gaming were
SEK253.7m. In the financial year to 31 December 2019 the profit before tax for
Enlabs was €9.4m and for Global Gaming was a loss of SEK119.0m.

 

Enquiries:

 Investor Relations

 Entain plc
 David Lloyd-Seed, Director of Investor Relations & External Communications      investors@entaingroup.com
 Jennifer Spencer, Investor Relations Manager
 Media

 Entain plc

 Tessa Curtis, Head of Media Relations                                           tessa.curtis@entaingroup.com

 Jay Dossetter, Head of ESG and Press Office                                     jay.dossetter@entaingroup.com
 Powerscourt
 Rob Greening / Elly Williamson                                                  Tel: +44 (0) 20 7250 1446

                                                                                 entain@powerscourt-group.com

 

Notes

(1)   The SEK/GBP currency exchange rate applied for purposes of such
conversion is 11.191, as derived from Oanda.com as of 5 January 2021.

(2)   Analyst consensus consists of financial estimates accessed through the
Enlabs website and consists of Redeye (22 November 2020) with Sales of €93m
and EBITDA of €25m, and Introduce / ABG Sundal Collier (12 November 2020)
with Sales of €86m and EBITDA of €22m.  The opinions, forecasts,
estimates, projections or predictions made by these analysts reflect their own
views and do not represent the opinions, forecasts, estimates, projections or
predictions of either Entain or Enlabs or their management. Further, the
reference to them does not imply that either Entain or Enlabs endorses,
concurs with or adopts such analyst estimates. Neither Entain nor Enlabs
assumes any liability for the accuracy or completeness of such estimates.
Neither Entain nor Enlabs undertakes any obligation to update or revise such
estimates, even if they differ from their own forecasts or expectations.

(3)   The GBP/EUR currency exchange rate applied for purposes of such
conversion is 1.112, as derived from Oanda.com as of 5 January 2021.

 

LEI: 213800GNI3K45LQR8L28

 

Forward-looking statements

This document contains certain statements that are forward-looking statements.
They appear in a number of places throughout this document and include
statements regarding our intentions, beliefs or current expectations and those
of our officers, directors and employees concerning, amongst other things,
results of our operations, financial condition, liquidity, prospects, growth,
strategies and the business we operate. These forward-looking statements
include all matters that are not historical facts. By their nature, these
statements involve risks and uncertainties since future events and
circumstances can cause results and developments to differ materially from
those anticipated. Any such forward-looking statements reflect knowledge and
information available at the date of preparation of this document. Other than
in accordance with its legal or regulatory obligations (including under the
Market Abuse Regulation (596/2014) (as such regulation forms part of retained
EU law (as defined in the European Union (Withdrawal) Act 2018 and as amended
(if applicable) by the Market Abuse (Amendment) (EU Exit) Regulations 2019
(Regulation 2019//310)), the Listing Rules, the Disclosure Guidance and
Transparency Rules and the Prospectus Rules), Entain undertakes no obligation
to update or revise any such forward-looking statements. Nothing in this
document should be construed as a profit forecast. Entain and its directors
accept no liability to third parties in respect of this document save as would
arise under English law.

 

 

 

About Entain plc

Entain plc (LSE: ENT) (Formerly GVC Holdings PLC) is a FTSE100 company and is
one of the world's largest sports-betting and gaming groups, operating both
online and in the retail sector. The Group owns a comprehensive portfolio of
established brands. Sports brands include bwin, Coral, Crystalbet, Eurobet,
Ladbrokes, Neds and Sportingbet; gaming brands include CasinoClub, Foxy Bingo,
Gala, Gioco Digitale, partypoker and PartyCasino. The Group owns proprietary
technology across all of its core product verticals and in addition to its B2C
operations provides services to a number of third-party customers on a B2B
basis. The Group's unique technology platform also powers BetMGM, the
joint-venture it operates with MGM Resorts to capitalise on the rapidly
regulating US sports betting and iGaming market. Entain is tax resident in the
UK with licences in more than 20 countries, across five continents. The
Group's commitment to delivering sustainability and growth is recognised
through its membership of the FTSE4Good and DJSI ESG indices, which identify
companies that meet globally recognised corporate responsibility standards.
 Further information about Entain is available at www.entaingroup.com
(http://www.entaingroup.com)

 

About Enlabs AB

Enlabs owns and manages companies that are active in the gaming and media
sector. The Company creates entertainment in three business areas namely
gaming, media and solutions. Gaming, online casinos and land-based gaming
stores operate under prime brands such as Optibet and NinjaCasino. The firm's
products are casino, betting, poker, bingo, fantasy- and virtual sports.
Within the media segment, Enlabs conducts performance-based marketing towards
the online gaming sector whereas, in the solutions business area, the
Company's B2B operations include service for sports results and technology
solutions. The Company generates a significant majority of its revenue from
the gaming area. The operating subsidiaries hold national licences for their
operations and the group employs approximately 330 employees. The corporate
group has offices in Tallinn, Riga, Vilnius, Malta, Marbella, Minsk and
Stockholm. Enlabs' shares are listed on the Nasdaq First North under ticker
symbol NLAB.

 

 

 

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