Yesterday, the Australian gambling group Tabcorp formally rejected the AU$3-billion takeover bid of the British gambling operator Entain for its betting and media arm. As reported by Casino Guardian, Tabcorp has considered at least a couple of acquisition offers but it eventually decided to reject the one made by Entain describing it as too low.
Tabcorp, which is valued at about AU$10 billion, revealed that it intends to now hold a 3-month strategic review that could end up with a sale of its betting unit or separating it from the company’s booming lotteries unit in a demerger.
As explained by Steven Gregg, Chairman of Tabcorp, the sale of its betting and media arm depends on both overcoming regulatory hurdles and on bidders lifting their offers. Mr Gregg, who succeeded Paula Dwyer on the Chair position in January 2021, shared that he was pleased for potential suitors to return with higher takeover offers. He said that the deal certainty is just as important for the deal as the bid’s value, and the value of Entain’s offer is well under the actual worth of the business.
According to sources familiar with the matter, Tabcorp is willing to get no less than AU$3.5 billion for its betting unit. However, the review would have to fully evaluate how difficult a potential sale would be.
Several Hurdles Expected on the Way of the Potential Betting and Media Arm’s Sale
The hurdles that a potential sale is expected to face include the Australian Competition and Consumer Commission (ACCC) objecting to Entain’s offer to buy the betting and media arm of one of the largest gambling market players in Australia. On the other hand, the new owner of the unit would have to get the approval of the state’s racing bodies that have issued the operating licence for the monopoly retail services of TAB.
According to Mr Gregg, every hurdle is overcomable and it is only a matter of time and money for the company to agree on the sale of its business, which would take about 12 months to be finalised.
The aforementioned hurdles have been the reason why a number of investors believe that the most likely outcome for the wagering and media arm of Tabcorp is a demerger. This is exactly what several major shareholders have been insisting on after Tabcorp joined forces with Tatts Group in 2017.
The British gambling company Entain has not been the only bidder for the wagering and media unit of Tabcorp. Reportedly, Apollo, a US private equity group, was also among the operators that have been willing to acquire the Australian gambling giant’s betting and media business. As reported by Casino Guardian, Fox Corporation has been also considering entering the bidding process with a takeover offer, as it is willing to expand its presence on the territory of Australia by launching its Fox Bet brand.
The Chairman of Tabcorp refused to reveal the exact number of bidders who had expressed interest in purchasing the business but he said they were not that many.
Although its acquisition offer was officially rejected on March 29th, Entain remains confident that a takeover deal would be the most attractive option for Tabcorp’s betting and media unit.
- Author
Olivia Cole
