La Française des Jeux SA (“FDJ”) today announced a recommended public cash offer to holders of Swedish Depositary Receipts (the “SDRs”) of Kindred to tender all of their SDRs in the Company at a price of 130 SEK in cash for DSP (the “Offer Price” and the “Offer” respectively). The total value of the Offer corresponds to approximately SEK 27.951 million which represents a multiple of 10,9 times Kindred's underlying EBITDA for 2023. For simplicity and because each SDR represents one share of Kindred, – reads a statement made by the Board of Directors (the “Board”) of Kindred Group plc (“Kindred” or the “Company”) pursuant to Rule II.19 of the Takeover Offer Rules of Nasdaq Stockholm (the “Bidding rules takeovers”) – the SDRs will also be referred to as “shares” and the holders as “shares”.
The Offer represents a prize of:
- approximately 24,4 percent compared to the closing price of Kindred shares of 104,50 Swedish crowns on the Nasdaq in Stockholm on 19 January 2024, the last trading day before the announcement of the Offer;
- approximately 34,9 percent compared to the volume-weighted average trading price of 96,34 SEK of Kindred shares on Nasdaq Stockholm in the last 30 trading days prior to the announcement of the Offer;
- approximately 36,3 percent compared to the volume-weighted average trading price of 95,35 SEK of Kindred shares on the Stockholm Nasdaq in the last 90 trading days prior to the announcement of the Offer; And
- approximately 40,1% compared to the closing price of 92,80 SEK of Kindred's shares on Nasdaq Stockholm on November 28, 2023, which was the last trading day before the release of Kindred's Q3 2023 results, which included a statement that Kindred's board of directors believed shareholder value would be maximized through a third-party transaction.
It is expected that the acceptance period for the Offer will begin around February 20, 2024 and end around November 19, 2024.
The completion of the Offer is subject to:
- the Offer was accepted to the extent that FDJ becomes the owner of Kindred shares representing over 90% of the total number of Kindred shares (on a fully diluted basis);
- the receipt of all regulatory, governmental or similar authorizations, approvals and decisions necessary for the Offer and the acquisition of Kindred in each case on terms that, in the opinion of FDJ, are acceptable;
- no circumstances have arisen that could have a material adverse effect or that could reasonably be expected to have a material adverse effect on Kindred's financial position, prospects or operations, including its licenses and permits, revenues, results, liquidity, the strength, net worth or assets of Kindred;
- neither the Offer nor the acquisition of Kindred will be made in whole or in part impossible or significantly impeded as a result of any law or other regulation, any decision of a court or public authority, or any similar circumstance;
- Kindred will not take any action that could prevent or nullify the Offer or compromise the prerequisites for the realization or completion of the Offer;
- Since the articles of association of Kindred have been amended to permit an owner of stock, representing not less than 90 percent of the outstanding voting stock of Kindred, to require all other stockholders of Kindred to transfer all of their stock of Kindred to the owner; and the terms and conditions for SDRs have been amended so as to permit FDJ, having become the owner of not less than 90 percent of the total number of SDRs outstanding in Kindred, to require all other SDR holders to transfer all their SDRs in Kindred to FDJ at the same price as the Offer;
- no information made public by Kindred or disclosed by Kindred to FDJ is materially inaccurate, incomplete or misleading, and Kindred has made public all information that should have been made public by Kindred; And
- no other party announcing an offer to purchase shares or SDRs of Kindred on terms more favorable to Kindred shareholders than the Offer.
FDJ reserved the right to waive the conditions for completing the Offer. The Offer is not conditional on financing.
Kindred intends, through a separate press release to be issued later in the day, to convene an extraordinary general meeting in order to amend Kindred's articles of association. Following the successful amendment of Kindred's charter, Kindred intends to amend the terms and conditions of the SDRs so as to allow FDJ, having become the owner of no less than 90% of the total number of SDRs outstanding in Kindred, to require all other SDR holders to transfer all their SDRs in Kindred to FDJ at the same price as the Offer.
The Board, upon FDJ's written request, authorized FDJ to conduct a due diligence review of Kindred in connection with the preparation of the Offering. In connection with this review, FDJ has received certain preliminary financial information relating to Kindred's fourth quarter 2023. Kindred will announce this information today through a separate press release. Except as noted above, FDJ has not received any inside information in connection with this review.
FDJ has obtained irrevocable undertakings to accept the Offer and to vote in favor of an amendment to the articles of association in accordance with condition (vi) of the Offer from the shareholders of the Company, Corvex Management LP, Premier Investissement SAS, Eminence Capital, Veralda Investment and Nordea, representing in total approximately 27,9 percent of Kindred's outstanding shares. Irrevocable commitments apply regardless of whether a higher competing offer is submitted.
PJT Partners (UK) Limited, Morgan Stanley & Co. International plc and Canaccord Genuity Limited are acting as financial advisors and White & Case is acting as legal advisor to Kindred in relation to the Offer.
The Board has appointed Jefferies GmbH (“Jefferies”) to issue a so-called fairness opinion regarding the Offer Price from a financial point of view. The fairness opinion is attached to this declaration. Jefferies will receive a fixed fee for providing the opinion, which is not contingent on the size of the Offer consideration, the level of acceptance of the Offer or whether it has been completed.
The strategic review process conducted by the Board of Directors
On April 26, 2023, the Board of Directors announced the decision to initiate a review of strategic alternatives for the Company to maximize shareholder value. As part of the strategic review process, the Board explored a multitude of options, including operational initiatives, a merger or sale of the Company, and other possible strategic transactions. Following the announcement of the strategic review process, the Company solicited and attracted incoming interest from various parties. As described in this statement, the Board of Directors is of the opinion, following a careful and comprehensive evaluation of alternative options, including Kindred's long-term growth prospects, that the Offer represents the most attractive outcome for shareholders of Kindred's strategic review.
The recommendation of the Board of Directors
Founded in 1997 to provide customers with a better and safer way to bet in the modern digital world, Kindred has built a reputation as an innovator and innovator, quickly gaining a loyal customer base around the world. Over the past 25 years, Kindred has transformed gambling by investing in new technologies, existing products and people. Kindred is now one of the world's leading online gambling operators, offering over 30 million customers across 9 brands a great form of entertainment in a safe, fair and sustainable environment. Kindred has a track record of strong profitability and cash flow generation and is a leading online gambling operator with revenue from a brand, product and geographic perspective, with technology as a key differentiator. Through the Unibet brand, the Company holds market leadership in attractive European markets that offer stable regulated revenues and has a history of growth exceeding its core markets.
In evaluating the merits of the Offer, the Board considered the Company's full-year 2024 guidance communicated in November 2023 and long-term growth prospects, as well as the risks and uncertainties associated with executing those prospects. Such risks and uncertainties include possible adverse impacts on the Company and its business due to the highly competitive markets in which the Company operates, as well as potential impacts resulting from adverse regulatory or other changes in the Company's local regulated and .com markets, which alone or in combination may cause actual revenue growth or underlying profitability to deviate from expected growth or profitability and, therefore, impact the Company's ability to deliver value to shareholders.
In its evaluation of the Offering, the Board applied the methods normally used in evaluating public offerings for public companies, including Kindred's valuation relative to comparable public companies and prior comparable transactions, analyst expectations and the stock market in regarding the development of Kindred, the Company's stock price, premiums in previous public offerings, as well as the Board's view of the long-term value of Kindred based on expected future cash flows for the Company based on internal financial forecasts prepared by the management. The Board also took into account that the Offer includes a cash consideration, which, subject to the completion of the Offer, provides Kindred shareholders with the opportunity to realize value from their investment in cash in the near future and at a premium significant relative to Kindred's current share price, as well as a premium to Kindred's share price prior to the Board announcing its decision to initiate a strategic alternatives review for the Company on April 26, 2023.
The Company's financial advisors PJT Partners (UK) Limited, Morgan Stanley & Co. International plc and Canaccord Genuity Limited assisted the Board of Directors in evaluating the Offer. Furthermore, the Board has taken into consideration Jefferies' fairness opinion that the Offer Price, in Jefferies' opinion, is fair to Kindred shareholders from a financial perspective (subject to the assumptions and considerations set out in the fairness opinion).
The Board further notes that Corvex Management LP, Premier Investissement SAS, Eminence Capital, Veralda Investment and Nordea, whose holdings in Kindred collectively represent approximately 27,9% of the Company's total number of outstanding shares, have committed to accepting the Offer.
Having concluded this evaluation, the Board believes that the terms of the Offer recognize Kindred's long-term growth prospects, taking into account the risks and uncertainties associated with the realization of such prospects. The Board therefore unanimously recommends Kindred shareholders to accept the Offer.
Effects on Kindred and its employees
Pursuant to the Rules for Takeover Offers, the Board, based on the statements made by FDJ in the Offer press release published today, will present its opinion regarding the impact that the implementation of the Offer will have on Kindred, particularly in terms of employment, and its views regarding FDJ's strategic plans for Kindred and the effects such plans are expected to have on employment and the locations in which Kindred conducts business. In this regard, the Board notes that FDJ has stated that FDJ values the skills and talents of Kindred's management and employees and intends to continue to safeguard the excellent relationship that Kindred has with its employees. Based on FDJ's current operations and the current regulatory environment, FDJ does not intend to materially change Kindred's operations following the implementation of the Offer, other than exiting the Norwegian market and those other unregulated markets without a path of ongoing regulation. Other than with respect to this exit, there are currently no decisions on any material changes to Kindred or FDJ's employees and management or to the company's existing organization and operations, including working conditions and locations. The Committee assumes that this description is correct and has no reason to take a different view on the matter.
