Private equity fund makes £806m takeover bid for Cherry
Swedish consortium includes current shareholders Pontus Lindwall and chairman of the Cherry board Morten Klein
Swedish private equity fund Entertainment Intressenter BidCo AB (EE Intressenter) has made a SEK 9.2bn (£806m) bid to take over the Cherry Group.
An Independent Bid Committee for the firm has recommended for shareholders to accept the offer which equates to SEK 87 (£7.60) per share. EE Intressenter, a consortium made up of a number of funds, includes current Cherry shareholders Pontus Lindwall and chairman of the board Morten Klein.
At present the members of the fund own a combined 50,100,368 shares in Cherry, which equates to 47.4% of the group. The offer comprises the remaining 42% of shares.
Prior to the offer, the consortium carried out a due diligence review of Cherry.
A statement published by Cherry’s Independent Bid Committee said the offer would expire around 23 January 2019 and a settlement is expected on 31 January 2019.
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The Committee said: “The company’s share price over a recent period of time has come to partially reflect the potential participation by the company in a future consolidation [of the Swedish market].”
The Consortium intends to delist the company from NASDAQ Stockholm if the deal is successful, as part of a compulsory acquisition procedure under the Swedish Companies Act.
Speaking on behalf of the Consortium, Mika Herold, partner at Bridgepoint Advisers Limited, said: “We have followed Cherry closely for a long time and have the highest regard for the success and impressive track record that Cherry and its divisional management teams have achieved through driving innovation in the iGaming sector.
“However, we also believe that many of the opportunities and challenges facing Cherry and its subsidiaries are easier to approach in a private setting and with a more favourable capital structure,” Herold said.
Cherry’s share price was up 18.48% at the time of writing.
In an analyst note this morning, Redeye said: “We view the offer price as relatively fair given the weak investor sentiment, but still below the underlying value we see in Cherry that could materialize in a timeframe of 12-18 months.”