pollo Global Management has matched Entain’s $3.5 billion bid for Tabcorp’s wagering and media business with $4 billion. An offer that would see it take control of Tabcorp’s poker machine servicing business, said Tabcorp on Thursday afternoon, reports The Sydney Morning Herald.
The $11 billion listed gambling company said Apollo’s second offer was conditional on due diligence, finance, approval from regulators and Tabcorp’s racing industry partners.
“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,” the company said in a statement released yesterday.
Entain, which owns online bookmakers Ladbrokes and Neds in Australia, made an original AU$3 billion offer for Tabcorp’s TAB wagering arm in February, however after being knocked back, it increased to AU$3.5 billion last week.
Due to the interest from multiple parties, Tabcorp’s board together with chairman Steven Gregg launched a strategic review looking at whether it should try to sell its wagering and media business or demerge the unit from its lotteries arm and list it as a separate company on the ASX.
Investors have become increasingly frustrated with Tabcorp over the performance of the wagering unit, as it lost ground to online rivals including Sportsbet and Ladbrokes. Meanwhile, strong returns from its lotteries business have led to some investors pushing for a break-up of the $11 billion merger between Tabcorp and Tatts in 2017.
Entain has not expressed any interest in Tabcorp’s pokies servicing business so far. But the relatively small unit may sit more logically with wagering in a demerger situation, meaning Apollo’s secondary $4 billion offer for the wagering and the pokies businesses may gain more traction with Tabcorp’s board.
Media mogul Lachlan Murdoch has also expressed interest in Tabcorp’s wagering and media assets as his Fox Corporation looks to grow on the success of its Fox Bet operation in the US, while Australia’s online wagering pioneer Matthew Tripp has also positioned himself to be involved in a deal.
A major complication in any sale going ahead is the new owner being able to renegotiate agreements Tabcorp has with state racing bodies, which get most of their funding through licenses they issue to TAB.
Gregg said earlier this year that the certainty of any deal passing regulatory muster would be just as important in determining the future of the business as the size of the bids it receives.
Tabcorp’s shares have risen steadily on the likelihood of a demerger or sale, increasing 28% since January 1. They closed 0.2% higher at $5.01 on Thursday.