New York-based hedge fund Corvex Management, a major shareholder of Swedish online gaming group Kindred, has urged the company’s board to consider a sale of the business. The Unibet operator has now taken notice of the statement, and said it looks forward “to continuing a constructive dialogue” with all shareholders going forward.
On April 28, 2022, Corvex disclosed ownership of more than 10% of the shares and voting rights of Kindred. And in response to what the hedge fund describes as “several inquiries,” issued a statement regarding its investment on Wednesday.
“We are excited to be large shareholders of Kindred. To date, we have had constructive conversations with both the Chairman of the Board and senior management of Kindred,” the company said. “We believe Kindred has built a strategic position in the rapidly growing global online gaming space.”
However, given recent developments, Corvex said it believes the Kindred Board “should immediately retain a leading, global financial advisor to evaluate strategic alternatives, including the potential value that could be achieved through a sale or business combination.”
“A fully informed Board will be in the best position to weigh any strategic alternatives, compared with Kindred’s stand-alone business plan,” the statement reads. “While we have not pre-judged any path for Kindred, we believe the Board should possess all relevant market information and let the data drive the decision-making process.”
The Swedish gaming group has now issued a statement in response to Corvex. The group stated it is currently recognized as a leading operator in the global online gambling sector, and that its Board and management are fully committed to the current strategic direction.
"We are confident about the long-term opportunities for the company and value creation potential for all our shareholders," commented Evert Carlsson, Chairman of the Board at Kindred Group. "We welcome and look forward to continuing a constructive dialogue with all our shareholders going forward."
Kindred’s shares rose 5% on Wednesday after Corvex stated it had told the board to consider a sale. The gaming business told Reuters it had noted the shareholder’s statement, but did not have any further comment on the issue.
Unibet is Kindred's most well-known brand
According to ABG Sundal Collier analyst Oscar Rönnkvist, the company would be an attractive asset in the consolidating online gaming market, especially for US companies, such as Florida-based Fanatics.
"While Kindred has a proprietary developed platform, it also has market access to 11 US states and a license in the Canadian province Ontario," Rönnkvist said, according to the cited source. Meanwhile, Pareto Securities analyst Georg Attling said the news was not a surprise as the ownership of Swedish iGaming companies has shifted to foreign investors over the last years.
Corvex is led by experienced investor Keith Arlyn Meister, a former principal of private investment fund Icahn Enterprises. It has become the second-largest investor in Kindred, behind fund Capital Group, which holds a 15.2% share.
Kindred’s most recent trading update, delivered in late April, saw the company’s financial results impacted by what the business expects to be short-term headwinds. Total revenue (B2C and B2B) was £246.7 million ($307 million), down from £352.6 million ($438.7 million).
Kindred's Swedish peer LeoVegas received on Monday a $607-million bid from U.S. casino operator MGM Resorts International, which is eyeing global expansion. The European iGaming company’s Board of Directors has unanimously recommended shareholders accept the offer.