Plenty of options
Apollo Global Management has submitted an AU$4bn (US$3.1bn) bid for Tabcorp Holdings Limited’s wagering and media businesses, as well as its gaming services business. Tabcorp announced the offer from the New York-based investment firm on Thursday afternoon through an Australian Stock Exchange (ASX) market announcement.
alternative offer of AU$3.5bn (US$2.7bn) for only Tabcorp’s wagering and media business
Apollo also made an alternative offer of AU$3.5bn (US$2.7bn) for only Tabcorp’s wagering and media business. UK gambling group Entain Plc has also made an AU$3.5bn (US$2.7bn) bid for the wagering and media business.
The latest Apollo bid is subject to various conditions, including regulatory approval and reaching agreements with some of the operator’s major partners. In its statement, Tabcorp said: “The Tabcorp board has not yet formed a view on the merits of the revised proposal and will assess it in the context of the previously announced strategic review.”
Considering all possibilities
After initially receiving interest from numerous parties, the Tabcorp board announced in late March that it would be launching a strategic review. The goal of the ongoing review is to decide if it should look to sell its wagering and media businesses or to list them on the ASX as a separate entity from the lotteries business. Tabcorp’s gaming machines monitoring services business is not part of the strategic review.
its lotteries business is still performing strongly
The betting side of Tabcorp has been struggling as of late, with online competitors Ladbrokes and Sportsbet grabbing a lot of market share. Its lotteries business is still performing strongly, though, which is why some investors are calling for a break-up of the company’s assets.
One issue that might be a problem for a possible sale relates to agreements between Tabcorp and Australian state horse racing bodies. These organizations get the majority of their income from the licenses that they issue to TAB. Tabcorp chairman Steven Gregg said earlier in 2021 that a lot would depend on the certainty of a potential buyer getting the green light from these bodies.
A lot of interest
It’s not only Apollo that is in the race to buy these Tabcorp assets. Entain, a leading UK-based gambling group that owns notable bands like Ladbrokes, Coral, and partypoker, originally submitted an AU$3bn (US$2.3bn) bid for Tabcorp’s TAB betting business back in February. This offer was subsequently rejected, leading to Entain’s revised AU$3.5bn ($US2.7bn) offer in late April. It has not shown any interest to date in the gaming services business. If it is ultimately successful with its bid, Entain would be the biggest player in the Australian betting market with close to 50% market share.
Another potential suitor is Fox Corporation. The company’s CEO Lachlan Murdoch has reportedly been working behind the scenes alongside other investors to make a potential bid. Fox Corporation’s US betting brand FOX Bet has registered its trademark in Australia, so a possible launch in the nation could be in the works. Sportsbet and BetEasy founder Matthew Tripp has also reportedly been involved in a potential Tabcorp bid.
Apollo expanding its reach
Apollo is looking to expand its presence in the global gambling sector. The firm has US$433bn in assets under management to help it acquire companies of interest. Already over the past year, it has bought the Las Vegas operations of Las Vegas Sands for US$2.25bn, Great Canadian Gaming for US$1.96bn, and Italian gambling operator Gamenet for approximately US$1.2bn.
It is also reportedly in the running to acquire the non-US assets of William Hill following its merger with Caesars Entertainment. The investment firm was unsuccessful in its bid for the entire William Hill business before the merger.
Just this week, Apollo bought Verizon Media for US$5bn. This means that Yahoo! Sports will be under Apollo’s control. BetMGM, the online gambling operation jointly owned by Entain and MGM Resorts International has a multi-year partnership with Yahoo! Sports.