Tabcorp Rejects Entain’s Buyout Offer

Tabcorp logo

A $3 billion offer from British group Entain to buy Tabcorp’s wagering and media division has been rejected, but Tabcorp has said it will undertake a review that could lead to an auction of the business.

The Age reports that Entain, which owns Ladbrokes, lobbied its bid for Tabcorp’s bookmaking business in early February, with at least one rival private equity backed consortium expressing interest and the Murdoch family’s Fox Corporation also exploring a bid.

But $10 billion Tabcorp said last Monday morning that the proposals it has received to date “do not adequately value Tabcorp’s wagering and media business”.

Tabcorp said in an ASX statement that it would instead run a “strategic review” to assess the structure and ownership of the group to maximise shareholder value.R
The outcome could include a sale of its wagering and media division, or a demerger from its booming lotteries business, something several major shareholders have been pushing for following the merger of Tabcorp and Tatts in 2017.

“Our clear objective is to ensure that we fully maximise the value of Tabcorp’s gambling entertainment businesses for our shareholders,” Tabcorp chairman Steven Gregg said.

Tabcorp said its search for a replacement chief executive officer has been put on hold while it conducts the review, with outgoing boss David Attenborough to stay on in the interim.

Entain entertains Tabcorp purchase

Entain Logo

The British owner of Ladbrokes, Entain, is reported to be in the early stages of a buyout of Australian bookmaker and gambling heavyweight Tabcorp.

Bloomberg reported in February that Entain made a non-binding offer for the wagering and media division of 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

Jumbo logo

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 stock broker 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.

William Brown

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