2MX Organic: A "free look" at a transaction carried out by France's best retail operator in the organic food space (Disclosure: Yes, it's a SPAC!)

Disclaimer: We are shareholders of 2MX Organic. 

At DK Value we like a good old low risk, high reward set-up. Usually, it takes the form of high-quality companies with good growth potential trading at significant discount to intrinsic value. However, when we have lots of cash sitting around, it can look like 2MX Organic, a French SPAC listed in December 2020 with the purpose of acquiring a leading distributor or a consumer goods player benefiting from the shift to more organic and sustainable food.

Yes, we know that between dilution, bad incentives and record-high business valuations, SPACs are a usually a terrible value proposition. However, when the SPAC’s CEO, Moez-Alexandre Zouari, in addition to its founder shares, buys 10% of the company for EUR30m at the IPO price (EUR 10), we take notice and dig deeper. 

Enlabs: Why shares are worth at least SEK60, 50% above Entain’s public offer

Disclaimer: We own 0.1% of Enlabs’ capital. You can find our initial investment case (28 July 2020) on this blog as well. 

We originally intended to use this platform to 1) share our point-by-point rebuttal to the 6 arguments laid out by Enlabs’ Independent Bid Committee’s (“IBC”) in favor of Entain’s SEK40 public offer [1] and 2) ask Enlabs’ shareholders not to tender their shares during the acceptance period (21 January – 18 February 2021). Then news came out yesterday that Hans Isoz, Enlabs’ 6^th biggest shareholder, had rallied enough shareholders to block the transaction, which is conditional to a 90% acceptance rate [2]. This is a very welcomed development, and we commend Mr. Isoz for stepping up for all Enlabs’ shareholders.

We hope with the following to provide a framework as to the extent to which Entain’s offer undervalues Enlabs. Importantly, we show why Enlabs is worth at least SEK60 per share (50% higher that Entain’s bid), even under the IBC’s flawed valuation methodology.