Corvex Management Pushes Kindred to Consider Sale

Posted on: May 4, 2022, 08:17h. 

Last updated on: May 4, 2022, 11:39h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

After recently doubling its stake in Kindred Group, Keith Meister’s Corvex Management is pushing the Swedish gaming company to hire investment bankers and sell itself.

Corvex Kindred
Corvex Management founder Keith Meister, seen in an illustration from the Wall Street Journal, above. Meister is pushing Kindred to sell itself. (Image: Wall Street Journal)

Corvex, a New York-based activist investor, issued a statement today urging Kindred’s board of directors to immediately consider a sale.

Given recent developments, we believe 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,” according to a statement issued by Corvex.

The press release hit the wires just days after Kindred revealed Meister’s investment firm now owns 10.12% of its shares outstanding. That means in the span of fewer than three months, the hedge fund roughly doubled the size of its stake in the gaming company.

Corvex bought an initial stake of more than 5% in Kindred in February.

For Corvex, Interesting Timing in Pushing for Kindred Sale

Corvex is an activist investor, meaning that when it takes equity positions in companies, it does so under the auspices of pushing for some form of change.

Those suggested alterations can include shedding lagging businesses, other avenues for unlocking shareholder value, or outright sales.

The hedge fund’s push for Kindred to evaluate a sale comes just two days after MGM Resorts International (NYSE:MGM) floated a $607 million cash offer for internet casino and sportsbook operator LeoVegas AB. Like Kindred, LeoVegas is a Swedish company, and Meister is a board member at MGM. The casino behemoth is offering $6.20 a share for the Swedish gaming company, and the deal could close before the end of 2022 if the proposal is accepted. It’s unclear if that transaction will factor into Kindred’s decision-making process.

“A fully informed Board will be in the best position to weigh any strategic alternatives, compared with Kindred’s stand-alone business plan. 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,” according to the Corvex statement.

Kindred Response

While highlighting Kindred’s enviable positioning in the global online gaming market, Corvex acknowledges having “constructive conversations” with the company’s chairman of the board and senior management.

The Kindred response to the hedge fund auguring for a sale is typical of most companies in this position.

We are confident about the long-term opportunities for the company and value creation potential for all our shareholders. We welcome and look forward to continuing a constructive dialogue with all our shareholders going forward,” said Chairman of the Board Evert Carlsson in a statement.

Corvex did not mention possible suitors for Kindred, or if it’s had conversations with parties interested in acquiring the gaming operator.