Candle Lake's $13.8 billion Evolution offer tests shareholder appetite

Billionaire Kenneth Dart's investment firm triggered Sweden's mandatory takeover rules with a SEK 695-per-share cash bid for Evolution.

Candle Lake, the investment firm controlled by billionaire Kenneth Dart, launched a mandatory cash takeover offer for Swedish online casino provider Evolution at SEK 695 per share, valuing the company at about 131.7 billion crowns ($13.8 billion).

"The bid does seem to imply that Candle Lake would like to own more shares in Evolution," Jefferies said in a note Thursday.

The offer represents a 5.7% discount to Evolution's closing price of 737.2 crowns on Wednesday. Cayman Islands-registered Candle Lake disclosed last month it had lifted its holding to just above 30% of the shares and votes in Evolution, triggering Sweden's mandatory takeover rules that require a bid for remaining shares within four weeks. Evolution shares were down around 1% by midday in Stockholm, and the company declined to comment when contacted by Reuters.

Candle Lake said it made the bid because of the offer obligation but did not intend to buy all Evolution shares. The mandatory offer structure means the firm is not required to complete a full acquisition, yet Jefferies' assessment suggests Candle Lake may seek to expand its position beyond the current threshold. A successful full takeover would delist one of Europe's largest iGaming operators, reshaping the competitive dynamics of the online casino sector.

The offer price matches the stock's level on July 24, when Candle Lake first disclosed its 30% stake, according to Bloomberg data. Swedish takeover regulations require the mandatory bid to be priced at the highest price paid by the acquirer during the six months preceding the obligation trigger, anchoring the offer to that date's trading level. This mechanism explains why the offer sits below the current market price — a structural feature of mandatory bids rather than a reflection of Candle Lake's valuation view.

For Evolution shareholders, the mandatory offer provides a defined exit price, though the discount to Wednesday's close reflects market expectations that Candle Lake may not complete a full buyout. The outcome hinges on shareholder acceptance levels and whether any competing bidder emerges for the Stockholm-listed gaming company, which had a market value of roughly 138 billion crowns based on Wednesday's close. A competing offer would need to clear the mandatory bid threshold and would likely require a substantial premium to attract shareholder support.

The deal would mark one of the largest takeovers in the European iGaming sector, following Entain's rejection of a $22 billion approach from DraftKings in 2021 and Flutter Entertainment's continued expansion through acquisitions. Evolution, which supplies live dealer casino games to operators worldwide, has been a consistent cash generator, with revenue growth driven by regulatory tailwinds in markets such as the United States. The company's live casino products are used by major operators including Bet365, DraftKings, and Caesars Entertainment, giving it a central position in the online gaming supply chain.

Candle Lake's move comes as private investment firms increasingly target gaming assets for their steady cash flows and resilient demand. The mandatory offer structure, however, limits the premium Candle Lake can pay, potentially reducing the likelihood of full acceptance. If shareholders reject the bid, Candle Lake would retain its 30% stake without the obligation to raise it further, leaving the company's ownership structure in limbo. The firm could also return with a voluntary offer at a higher price, though Swedish rules would require a minimum 90% acceptance for a compulsory squeeze-out of remaining shareholders.

The Swedish Financial Supervisory Authority will review the offer documentation, with the acceptance period typically running four to six weeks from formal announcement. Evolution's board is expected to issue a formal recommendation to shareholders in the coming weeks, and any competing bidder would need to act before the acceptance period closes. The outcome will determine whether Evolution remains a publicly traded company or becomes a privately held asset in Dart's investment portfolio, which spans real estate, manufacturing, and financial services.

This article is for informational purposes only and does not constitute investment advice.