Entraction Shares Climb on Global Betting Exchange Deal30th September 2009 8:21 am GMT
Shares in Entraction Holding AB gained close to 10% in early trading Wednesday on news that the company had successfully negotiated to acquire warrants for 2.5 million class B Entraction shares, which it had issued to Global Betting Exchange (GBE) in October 2007.
The 2007 agreement gave GBE a two year option to acquire 125 million B shares in then 24hPoker Holding AB, for a consideration of SEK0.42 per share. Today that equates to 2.5 million class B shares in Entraction Holding AB at SEK21 per share.
If the warrants were exercised today, it would have cost GBE SEK52.5 million versus the current market price of SEK80 million, delivering them a gain of SEK27.5 million.
Instead, Entraction has negotiated with GBE to purchase the warrants for a total consideration of €2.25 million or approximately SEK23 million.
Entraction said in a statement this morning that the acquisition would have an impact on cash flow but not on the company's bottom line as the acquisition cost would be made against equity, adding that the warrants will be immediately cancelled on acquisition.
"We are delighted to have enjoyed the support of the Global Betting Exchange Group in the development of Entraction over the past two years and in agreeing to Entraction acquiring the warrants at a price substantially lower than current trading price, thus delivering significant value to our shareholders," said Entraction CEO Peter Åström. "The exercise of the warrants would have incurred a large dilution at a low valuation relative to the strong development Entraction has shown the past two years."
Shares in Entraction Holding AB (Co. Profile) (STO:ENT-B) were trading at SEK58.50 per share at 08:50 GMT in Stockholm this morning, up 8.84% on the day at a new 52-week high.