Shares in Tabcorp dipped 2.7% to $4.69 yesterday after the company rejected an approach from UK gambling group Entain.
Entain had offered a reported $3 billion for Tabcorp’s wagering business and revealed it had decided on a self-examination and review and possible demerger.
In reply Entain said a demerger of the struggling business would lock in the “status quo” for investors.
Tabcorp said it had decided Entain’s bid for its wagering and media business was too low to accept, but it would run a “strategic review” to assess the merits of a demerger or an auction.
Tabcorp said that the proposals received to date “do not adequately value Tabcorp’s wagering and media business”.
The outcome could include a sale of wagering and media, or a demerger of wagering from its booming lotteries business – something several major shareholders have been pushing for since 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 in Monday’s statement.
Big Tabcorp shareholders have been pushing the group to spin-off wagering – which has been losing ground to online bookmakers such as Sportsbet – to unlock value in its booming lotteries business. SportsBet is owned by Flutter group, which was created when Paddy Power merged with Betfair.
A spokesman for Entain told media in Australia it welcomed the review as it would allow investors to “weigh up the certainty of its proposal to acquire the Tabcorp wagering and media business against a demerger, which is simply the status quo option”.
“Entain is confident an acquisition of the business represents the most attractive pathway to value realisation for investors and that its business is a clear and obvious choice as a strong, long-term partner for Australian racing,” the spokesman said.
Entain owns the rival wagering brands Ladbrokes as well as Sportingbet, bwin and Coral. It rejected a $US11 billion bid from MGM Resorts earlier this year.
Entain said the MGM offer “significantly undervalues the company and its prospects”.
Isn’t that what Tabcorp said about the Entain approach?
