Dart’s Candle Lake Prices Evolution Offer Below Market

Kenneth Dart’s investment vehicle had already crossed Sweden’s 30% mandatory-bid threshold in July. That move was covered by 15M at the time, when Candle Lake still had the choice of making an offer or cutting its holding. It has now chosen the offer route.

Offer Arrives Below the Market Price

Evolution shareholders are being offered SEK 695 in cash for each share. At that level, the company is valued at about SEK 131.7 billion, or roughly $13.8 billion.

The price is the same as the maximum Candle Lake paid for shares on July 24, when it crossed the mandatory-bid threshold. It is also 5.7% below Evolution’s SEK 737.2 closing price on August 12.

Candle Lake directly owns 59,798,619 Evolution shares, equal to 31.56% of the outstanding stock and votes. The value of the shares covered by the offer, excluding those already controlled by Candle Lake and related parties, is about SEK 90.1 billion.

Candle Lake Rules Out Operational Changes

The offer does not come with a plan to take over day-to-day control of Evolution. Candle Lake described the stake as a long-term financial investment and said it does not currently plan material changes to Evolution’s operations, management, workforce or locations. The investment vehicle is wholly owned by Dart.

Its exposure is slightly larger than the direct holding. Cash-settled total return swaps give a related party financial exposure to another 4,037,416 Evolution shares. Including those instruments, total exposure is around 32.04%.

The acceptance period is expected to run from August 17 to September 15. Settlement is scheduled to begin on September 23.

Jefferies Sees a Compliance-Led Offer

The below-market price has drawn attention because it makes the offer look very different from a conventional takeover premium. Jefferies analyst James Wheatcroft said the bid appears designed to meet the Swedish takeover requirement rather than secure all remaining shares. 

The bank also suggested Candle Lake may want room to continue increasing its Evolution position after the mandatory offer process is finished. Evolution declined to comment on the proposal when contacted by Reuters.

The Next Number to Watch Is Ownership

The SEK 131.7 billion headline valuation is less informative than Candle Lake’s stake after the offer closes. A discounted bid may attract limited participation while the market price remains higher. 

If Candle Lake later reaches more than 90% of Evolution, it says it would start compulsory redemption of the remaining shares and seek a Nasdaq Stockholm delisting. Until then, the offer looks primarily like the legal consequence of the July stake increase.