- »Entain Entertains Tabcorp Purchase
Entain Entertains Tabcorp Purchase
Bloomberg reports that Entain made a non-bind offer for the wagering and media divisionof Australia’s largest gambling company.
Discussions about a combination with Entain’s existing Australian business are at an early stage, the London-listed owner of the Ladbrokes betting chain said on Tuesday.
The offer could face competition as Tabcorp said the business has received “a number of unsolicited approaches and proposals” in recent weeks.
Any deal would give Entain extra scale in the region.
Sports betting has become a busy area for mergers globally as the industry transitions online and US states legalise wagers.
Last month, Entain rejected an $11 billion takeover approach from US casino operator MGM Resorts International.
Wagering and media is Tabcorp’s biggest division after the lotteries and keno business.
In the year to June 2020, wagering and media-generated 40 per cent of its A$5.22 billion in revenue, company filings show.
“Given the consolidated nature of the Australian market, there are limited such opportunities left to look at,” Goodboyd analyst David Brohan said in a note to clients.
“Assuming any deal is completed at the right price we can see positives from a transaction.”
Entain’s statement confirmed an earlier media report by an Australia newspaper which said Tabcorp had received a breakup proposal in the past two weeks.
Tabcorp shares jumped 9 per cent in trading on Tuesday, valuing the company at A$9.9 billion.
Tabcorp sells stake in Jumbo Interactive
Tabcorp has entered into an agreement to sell an 11.6 per cent in online lottery business Jumbo Interactive for close to A$100 million.
iGamingbusiness reported in September that the Australian gambling operator will sell more than 7 million shares in Jumbo to stockbroker UBS.
Tabcorp managing director and chief executive David Attenborough explained there was no longer a need for the business to hold a stake in Jumbo, after it formalised a long-term extension of its reseller agreement until August 2030.
Under the agreement, Jumbo will pay $15 million to Tabcorp, as well as a service fee of 4.65 per cent of subscription revenue, for reselling rights for lottery products in New South Wales, Victoria, South Australia, Northern Territory, Australian Capital Territory and Tasmania, as well as international jurisdictions.
“Following the recent extension of our long-standing commercial distribution relationship with Jumbo for a ten-year term to August 2030, there is no longer a strategic rationale for Tabcorp’s shareholding in Jumbo,” Mr Attenborough said.
As a result, we have decided to monetise this investment, with the resulting capital to be used to further strengthen the balance sheet and support the move towards our recently revised target gearing range.
Tabcorp expects the deal to be worth a profit of $69m after tax. These funds will be used to pay down existing drawn bank debt facilities.
In related news, Tabcorp has appointed Janette Kendall to its board as a non-executive director.
Ms Kendall has previously worked as a senior vice president of marketing at Galaxy Entertainment Group in China, and executive general manager of marketing at Crown Resorts.
She also serves on the boards of Vicinity Centres, Costa Group, Australian VenueCo, KM Property Funds, Visit Victoria and the Melbourne Theatre Company.
Ms Kendall will take up her seat on the board after receiving regulatory approval, acting as an observer of board meetings until then.
“We welcome Janette Kendall to the Tabcorp board,” Tabcorp chairwoman Paula Dwyer said.
“Ms Kendall is a highly experienced director who brings deep experience in the gambling entertainment industry, digital innovation, and marketing.