Swedish gaming group Cherry is the subject of a €893m takeover bid from a consortium that includes current chairman Morten Klein and Betsson CEO Pontus Lindwall.
Cherry’s Independent Bid Committee – set up specifically to consider the bid on the board’s behalf but excluding chairman Klein – has recommended shareholders accept the public offer of SEK87 (€8.46) in cash per share submitted by European Entertainment Intressenter BidCo.
EE Intressenter is a company jointly controlled by Bridgepoint Advisers, which is acting of behalf of a series of partnerships, namely Bridgepoint Europe VI Fund, Prunus Avium, Klein Group , Audere Est Facere , Pontus Lindwall, Berkay Reyhan and Can Yilanlioglu.
The total value of the offer is approximately SEK9.193bn (€893m), fully financed through a combination of equity provided by Bridgepoint and the other members of the consortium and debt financing provided by Ares Management.
The acceptance period is expected to start on or around December 20 and run until January 23, 2019, subject to any extensions.
One condition of completion is that EE Intressenter becomes the owner of more than 90 per cent of the total number of outstanding shares in Cherry.
EE Intressenter does not own any shares in Cherry at present although the members of the consortium own a total of 50,100,368 shares, corresponding to approximately 47.4 per cent of the total number of shares and 37.9 per cent of the total number of votes in the company.
In a statement, Cherry said that irrevocable undertakings to accept the offer have been received from shareholders representing 12,298,332 shares, meaning the consortium holds shares – or have secured commitments to accept the offer – corresponding to 59.1 per cent of the capital and 66.5 per cent of the votes.
The Independent Bid Committee consisting of Gunnar Lind, Johan Moazed and Jörgen Olsson was established on October 16. Rolf Åkerlind was elected to the board of directors on November 21 and has since joined the bid committee.
The Independent Bid Committee’s recommendation highlighted a number of considerations in connection with the offer, notably that the bid represents a premium of 20 per cent compared to the closing price of Cherry’s series B shares on Nasdaq Stockholm on December 17, the last trading day before the announcement of the offer.
The offer also corresponds to a premium of 28 per cent compared to the volume-weighted average share price of Cherry’s series B shares on Nasdaq Stockholm during the last 90 trading days and 59.6 per cent compared to the closing price on October 15, the day before the board received the written offer.
The committee also stressed that several of those individuals in the consortium “have a long ownership history and deep understanding of the company’s operations and future prospects”.
These include Jonas Cederholm, Game LoungeCEO and co-founder; Fredrik Langeland (co-founder of Game Lounge); Per Hamberg and Lars Kling (both Cherry founders).
EE Intressenter has said the consortium believes that Cherry will be able to “maximise value by focusing on driving the performance of the individual business units rather than managing the combined entity as a publicly listed company.”
Further it is stated that Bridgepoint and the other members of the consortium place great value on Cherry’s management and employees and expect that the offer will support continued growth and create “long-term positive effects for Cherry and its employees, customers and other stakeholders impacted by the operations of Cherry”.
The Cherry statement continued: “Thus, it is the assessment of the Independent Bid Committee that the offeror would be a good owner of the company in the coming years, which has been taken into consideration in the decision on a recommendation.”
The news breaks as Cherry’s home market of Sweden prepares to launch its re-regulated igaming market on January 1.