Lottoland CEO Nigel Birrell is still not at all happy

Seemingly accepting that Friday’s Zeal Network shareholder meeting will go ahead as planned, Lottoland CEO Nigel Birrell has written an open letter to Zeal shareholders urging them to vote against the proposed takeover of Lotto24.

The letter follows last week’s submission – and swift rejection – of a rival bid from Lottoland, not to buy Lotto24 but instead acquire Zeal’s German business for a sum in the range €60m to €76m.

Lottoland, itself a minority shareholder in Zeal, holding a (recently increased) 5.53 per cent stake, asserts that the deal to acquire Lotto24 is in the interests of only “certain shareholders” in Zeal.

In today’s letter, Birrell writes: “We are concerned that the [Zeal] board’s rushed response drew inaccurate conclusions and was misleading as to the value of our offer,” adding, “the board’s limited desire to engage with us and its rash conclusions seem to indicate that that the board is not interested in assessing any alternative.”

The letter, which can be read in full here, then outlines five key reasons why, Lottoland claims, Zeal shareholders should vote against the Lotto24 acquisition.

Birrell alleges that:

  1. The Lottoland deal to buy Zeal’s German business simply offers better value to shareholders.
  2. The deal disproportionately benefits the Günther family, thanks to the balance of shares it holds in each of Zeal and Lotto24.
  3. The Zeal/Lotto24 deal is “value destroying,” as it will result in existing Zeal customers moving away from the business or spending less.
  4. The Lottoland offer grants higher protection for shareholders, losing the benefit of the UK Takeover Code.
  5. The Lottoland offer is is achievable in a shorter period of time.

The letter closes in what is now customary uncompromising fashion:

“In summary, the Lottoland offer is superior financially to the Günther Family Transaction,
deliverable, subject to minimal conditionality and could be executed within a shorter time
frame. Therefore, the General Meeting should be delayed so that the Lottoland offer can
be fully evaluated and put to the Zeal Shareholders to vote on it.

“Alternatively, if the General Meeting is not delayed, we urge all Zeal Shareholders to vote
against both of the proposed resolutions so no further value is destroyed,” concludes the Lottoland CEO.

Zeal is yet to comment on the matters raised in Birrell’s letter.