Tabcorp Mulls Multiple Offers for Wagering and Media Arm, Including Entain Bid

  • The Australian gambling giant confirmed it had received a number of bids in a Tuesday statement
  • Entain, formerly GVC Holdings, has made a non-binding indicative offer for the betting business
  • Investors have been pressuring Tabcorp to break from its underperforming wagering segment
  • The operator's wagering and media revenue declined 10% y-o-y for the fiscal year 2020
TAB-branded betting shop
Australian gambling giant Tabcorp has received offers from multiple parties interested in its wagering and media business, including Entain. [Image:]

Spoilt for choice

Australian gambling giant Tabcorp has received bids from multiple parties for its wagering and media business. The offers come amid increasing investor pressure urging Tabcorp’s board to sell its less successful segment.

a number of unsolicited approaches and proposals”

Tabcorp confirmed the news in an ASX statement on Tuesday. It said it had received “a number of unsolicited approaches and proposals” for its wagering and media arm. Entain, formerly known as GVC Holdings, announced on the same day its non-binding indicative offer for the betting firm. The Ladbrokes owner said talks are at an early stage.

Despite interest from multiple parties, Tabcorp said an ultimate agreement is not certain. The company’s board is currently considering the offers and will update the market “in due course”.

After the news, Tabcorp shares grew to their highest point in 12 months. The price increased by almost 12% to AU$4.58 (US$3.48).

Investor pressure grows

Over the past 12 months, investors in Tabcorp have increased pressure on the company to break away from the wagering and media side of its business. They argue that Tabcorp should focus on its lottery arm, which has proved a more lucrative branch of the company.

As reported by the Sydney Morning Herald, Tabcorp investor Sandon Capital believes a split in the business would create more value for its investors. The company wrote to the Tabcorp board in November last year to convince them of the new strategy.

Gabriel Radzyminski, managing director of Sandon, said recent changes in Tabcorp’s board and management team had potentially opened the door for a change in the company. He commented: “It was an opportunity for a new board to start with a blank sheet of paper and say, right, here’s what we’ve got. But what should we be?”

Mounting investor pressure preceded some significant management resignations at Tabcorp. In July 2020, the CEO and chairperson both announced their intentions to depart the company within 12 months. Paula Dwyer, company chair, stepped down in December, while chief executive David Attenborough plans to leave in the first half of 2021.

Pandemic troubles for Tabcorp

Last year, Tabcorp struggled with the impact of COVID-19, which caused the shutdown of its retail operations. Its wagering and media segment took the steepest hit as a result.

For the full financial year ending June 20, 2020, the operator saw revenue fall 5% from 2019 levels to a total of AU$5.22bn (US$3.79bn). Wagering and media revenue was down 10% year-on-year to AU$2.08bn (US$1.58bn). In contrast, Tabcorp’s lottery and keno division grew its revenue by 2% to AU$2.12bn (US$1.61bn).

decline in consumer confidence and increased economic uncertainty”

Tabcorp has anticipated a “potential decline in consumer confidence and increased economic uncertainty” in the wake of the pandemic. The company introduced a number of measures to mitigate the impact of the crisis, including securing a Syndicated Facility Agreement with bank lenders representing facilities of AU$2.2bn ($1.67bn).

Tabcorp has demonstrated its interest in expanding its lottery business beyond Australia. In January last year, the operator entered the race to run the UK National Lottery. A number of gambling operators are vying for the license, including Sazka and Francaise des Jeux. The winning bidder will operate the lottery from 2023.

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