Private equity offer for Swedish online gambling operator Cherry

TAGs: cherry ab, Morten Klein, Pontus Lindwall, Sweden

cherry-ab-private-equity-takeover-bidSwedish online gambling operator Cherry AB is the takeover target of a private equity group whose members include the CEO of online gambling rival Betsson AB.

On Tuesday, Cherry confirmed that it had received an all-cash SEK9.2b (US$1b) takeover bid from European Entertainment Intressenter BidCo AB, a consortium whose members include Bridgepoint Europe VI Fund, Betsson AB CEO Pontus Lindwall and Cherry founder/chairman Morten Klein.

The consortium currently owns no Cherry shares, although its individual members collectively own a roughly 47.4% stake in the firm. The consortium has reportedly received acceptance of its offer by investors holding a further 11.6% of Cherry’s shares, bringing the total number of shares ready to take the plunge to 59.1%, which represents 66.5% of voting shares.

Given Klein’s involvement in the bid, Cherry has appointed an independent bid committee that is recommending that shareholders accept the offer, which represents a 20% premium to Cherry’s share price on the Nasdaq Stockholm as of December 17.

Cherry advised its shareholders that the offer’s acceptance period was expected to commence by December 20 and extend through January 23.

Bridgepoint Advisers Ltd partner Mika Herold noted that Cherry faced a “changing regulatory environment” and that “many of the opportunities and challenges facing Cherry and its subsidiaries are easier to approach in a private setting and with a more favorable capital structure.”

Among those regulatory changes is the January 1 launch of Sweden’s new liberalized online gambling market. Cherry, which derives a significant chunk of its revenue from Sweden, has yet to receive its new Swedish license, although the country’s gaming regulator has been frantically trying to clear the backlog of applications as the launch date draws near.

The many benefits of taking the company private include not only increased freedom in decision-making, but also the lack of future prosecutions for insider trading, like the charges that Swedish authorities laid against Cherry’s former CEO Anders Holmgren this summer. Those charges stemmed from the company issuing a profit warning, which caused its share price to fall, after which insiders allegedly snapped up more shares before delivering an unexpectedly positive Q1 earnings report.


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