A consortium led by British private equity firm Bridgepoint has made a takeover offer of 9.19 billion Swedish crowns ($1 billion) in cash for Swedish gaming company Cherry AB (CHERb.ST), Cherry said on Tuesday.
An independent committee set up to examine the bid recommended shareholders accept the offer of 87 crowns per share. Cherry Chairman Morten Klein is part of the bidding consortium, hence the role of the committee.
Cherry shares, which trade on the Nasdaq Stockholm, jumped 18.3 percent to 85.8 crowns, just shy of their record high from late November.
The company was founded in 1963 and operates in five business areas — Online Gaming, Game Development, Online Marketing, Gaming Technology, and Restaurant Casino.
The bid committee statement also highlighted forthcoming regulation of the Swedish gambling market which could make earnings more volatile.
It also noted that a number of Swedish institutions had announced they would distance themselves from the sector following changed investment mandates and new directives regarding sustainability.
“We also believe 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,” said Bridgepoint partner Mika Herold.
The bid committee also pointed to increased discussion in media about potential consolidation of online gambling companies. Bridgepoint’s offer comes nearly two months after William Hill’s (WMH.L) offer for Sweden’s Mr Green & Co (MRG.ST).
The Bridgepoint-led consortium said the offer cannot be increased.