Evolution's Board of Directors has unanimously recommended that shareholders reject Candle Lake Limited's mandatory cash offer, arguing that the proposed SEK695-per-share bid undervalues the company.
The recommendation follows Candle Lake's formal takeover offer announced earlier this month after the investment vehicle increased its stake above Sweden's mandatory bid threshold. The offer values the online gaming supplier at approximately SEK131.7bn, with the acceptance period running until around 15 September 2026.
In its statement, Evolution's Board said it had assessed the proposal based on several factors, including the company's current share price, strategic position, financial performance and future growth prospects.
Directors highlighted that the offer is priced at a 5.7% discount to Evolution's closing share price on 12 August, the trading day before the bid was announced and a 3.3% discount to the 20-day volume-weighted average share price leading up to the announcement.
While the bid represents a modest 1.6% premium to the average trading price before Candle Lake disclosed it had triggered a mandatory offer obligation in July, the Board concluded that the proposal does not reflect Evolution's fair market value.
The Board also noted Candle Lake's own statement that the offer is not intended to secure full ownership of Evolution but is being made solely because Swedish takeover rules required a mandatory bid after the investor exceeded the 30% ownership threshold.
According to Candle Lake, it has no plans to make material changes to Evolution's business strategy, operational footprint, management or employees following the offer. Evolution's Board said it had no reason to dispute those intentions.
Candle Lake currently owns approximately 31.56% of Evolution's shares and voting rights, having gradually built its position since mid-2024. The investor has indicated that if it ultimately acquires more than 90% of the shares, it intends to initiate compulsory acquisition proceedings and seek to delist Evolution from Nasdaq Stockholm.
The recommendation comes shortly after Evolution reached a £4.75m ($6.35m) settlement with the Gambling Commission following an investigation into the availability of its games on unlicensed gambling websites accessible to British consumers.
The regulator found shortcomings in the supplier's anti-money laundering risk assessment, third-party oversight and due diligence processes. Under the settlement, Evolution agreed to pay the sum in lieu of a financial penalty, commission an independent audit of its relevant policies within 12 months and cover the regulator's investigation costs.
Candle Lake currently controls around 31.56% of Evolution after crossing Sweden's mandatory takeover threshold in July
