ntain confirmed Tuesday it has made a new revised A$3.5bn (USD2.7B) offer to acquire the Wagering and Media businesses of Tabcorp Holdings. It is a half-billion-dollar increase to the A$3 billion offer it lobbed in early February.
The Ladbrokes owner said its revised all-cash bid represented “compelling value and certainty” for Tabcorp shareholders and was superior to “other alternatives” on the table. “The proposed transaction would be in-line with Entain's current M&A strategy, and presents an opportunity to acquire an attractive business, which when combined with Entain's existing Australian business, would create a leading, integrated multi-channel and multi-brand wagering company,” Entain said in a statement.
With the support of state racing bodies, which have licensing agreements with TAB, critical to any sale, Entain claimed it was a “strong strategic fit” to take over the TAB and would be “well placed to strengthen the funding outcomes for Australia’s racing industry”.
Tabcorp rejected the initial bid as too low and launched a strategic review of the wagering business to consider whether it should look to sell the unit, or split it off from its booming lotteries business as two separate listed companies, as reported by The Sidney Morning Herald. The firm said it had not formed a view on the merits of Entain’s new offer and would assess it “in the context of the previously announced strategic review.”
Tabcorp has about a 37% share of the Australian wagering market, across both its retail and digital footprint, while Entain’s Ladbrokes and Neds has an 11% stake. Combining the groups will put them well ahead of the other major player Sportsbet (37%), which is owned by Flutter, and any deal will need the Australian Competition and Consumer Commission is a Competition’s approval.
Private equity group Apollo and media heir Lachlan Murdoch have also expressed an interest in Tabcorp’s TAB wagering division, while Australia’s online wagering pioneer Matthew Tripp has also positioned himself to be involved in a deal, including in a demerger scenario and possibly by teaming up with Murdoch’s Fox Corporation.
Evans and Partners gaming analyst Sacha Krien said the new bid should be enough to get Entain through the door for due diligence, and that Tabcorp shareholders would support the offer. “The fact Tabcorp has released details of the bid this time suggests it will be seriously considered,” he said.
JPMorgan analyst Don Carducci said the offer was still too low for the business, which he values at $3.68 billion, and that Tabcorp splitting wagering and lotteries into two listed companies was the most likely outcome.