Evolution has urged its shareholders to reject a SEK131.7bn (€11.9bn) mandatory cash offer from Candle Lake Limited, the investment vehicle of billionaire Kenneth Dart.
The company stated clearly that the bid “does not reflect the fair value” of the business, setting the stage for a significant corporate standoff.
Candle Lake tabled the offer, valued at SEK695 per share, earlier in August after Dart’s shareholding in Evolution passed the 30% ownership threshold in July.
Swedish law requires that once a single entity holds 30% of a company’s shares, a mandatory offer for all remaining shares must be triggered automatically.
The acceptance period for the offer began on 17 August and is expected to end on or around 15 September, giving shareholders a defined window to make their decision.
Evolution’s board pointed out that the SEK695 per-share price was already below the company’s SEK733.30 share price on 13 August, the very day Candle Lake announced the offer.
Beyond the offer price, Evolution’s board also weighed the company’s current financial position, long-term prospects, and overall potential when forming its recommendation to shareholders.
Evolution also acknowledged Candle Lake’s earlier statement that it had no intention of buying the company outright, with Dart simply fulfilling a legal obligation under Swedish law.
“Based on its assessment, and in light of the discount compared to the company’s current share price, the board of directors considers that the offer does not reflect the fair market value of Evolution,” the company’s statement said.
“In view of all this, the board of directors recommends the shareholders to not accept the offer,” Evolution confirmed in its formal communication to investors.
Despite the firm recommendation to reject the bid, the situation could still evolve if Candle Lake manages to significantly increase its overall stake in the business.
Candle Lake stated in its initial offer that should its stake rise above 90%, it intended to initiate compulsory acquisition proceedings for all remaining shares in Evolution.
Under that scenario, Candle Lake would also seek to delist Evolution from Nasdaq Stockholm, fundamentally altering the company’s public market status.
Evolution’s share price reacted positively to the rejection recommendation on 24 August, rising 0.6% on opening to SEK825, sitting comfortably above the SEK695 offer price.
The gap between the current market valuation and the bid price underlines why Evolution’s board feels so strongly that shareholders should hold firm and decline the offer.
