Kenneth Dart Bids $13.8bn for Evolution and Says Plainly He Does Not Want to Buy It

Kenneth Dart's investment vehicle Candle Lake has made a mandatory cash offer of SEK695 ($73) a share for Evolution AB, valuing the live casino supplier at about $13.8 billion, and has told the market it has no interest in owning the company.

The bid exists because of Swedish law. An investor crossing 30% of a listed company must offer to buy the rest, and Candle Lake went through that threshold on July 24 after buying 2.05 million Evolution shares. The pricing gives the game away: the offer carries a premium of just 1.6% over the volume-weighted average price for the 20 trading days to July 24, and sits below Evolution's recent market price of roughly SEK750 ($79).

"Candle Lake's bid below the current share price is designed to fulfill stock exchange requirements, rather than a desire to own all the outstanding shares in Evolution," Jefferies analyst James Wheatcroft wrote to clients.

Candle Lake said the same thing itself in a 10-page disclosure on August 13. It described itself as "a long-term investor" that views the holding "as a financial investment in a well-managed, highly profitable business", praised Evolution's management and operational platform, and stated that "the Offer is, however, not motivated by any intention to acquire all outstanding shares in Evolution." It added that its plans "do not currently include any material changes with regard to Evolution's future operations" and that it is not seeking an activist role.

Analysts expect Evolution to reject the offer. If it does, Swedish rules let Candle Lake keep accumulating shares for another year without making a fresh proposal. Were the bid to succeed, Evolution would be delisted and taken private.

Dart, who renounced his US citizenship in 1994 for tax reasons and is worth an estimated $11.2 billion on the Bloomberg Billionaires Index, has long held tobacco and gambling positions. He also owns roughly 30% of Flutter Entertainment through swaps, a stake he has been adding to as the stock has fallen, with a filing this week showing a total return swap for 332,237 notional Flutter shares. Flutter is currently consolidating PokerStars onto its UK brands.