Rumours swirl that Entain is set to up its Tabcorp’s offer

by Mia Chapman Last Updated
Rumours swirl that Entain is set to up its Tabcorp’s offer

One of Europe’s biggest gambling companies, Entain, could increase its bid for a lucrative Australian sportsbook and media group that it’s had its eyes on for some time.

Casino.org reports that rumours are swirling that Entain could increase its bid for Tabcorp’s media and sports wagering businesses, in the face of increased competition for those assets.

The UK-based bookmaker is competing with private equity group Apollo Global Management and BetMakers for the Tabcorp units.

There’s also speculation that News Corp Australia could also be in the mix.

Tabcorp’s board met recently to discuss plans for the media and sports betting businesses and the offers it had received.

But no official announcement emerged from the conference.

“Speculation is mounting that Entain could come back with a higher offer for Tabcorp’s wagering and media unit as its share price soares on the London Stock Exchange,” The Australian said.

Entain stock is on a torrid pace in 2021.

It’s one of the best performing consumer discretionary names in the UK, while its US-listed equity is up almost 59 per cent year-to-date and 8.57 per cent over the past month.

In March, Entain offered $2.28 billion for the Tabcorp businesses prior to boosting that bid to $2.7 billion a month later.

Apollo and BetMakers throw their hat in the ring

Barely more than a week later, Apollo jumped into the fray, offering $3.1 billion to three Tabcorp units: gaming services, media and sports wagering. However, the gaming services business wasn’t part of the initial strategic review undertaken by the Australian company. If it’s removed from the equation, the private equity company’s offer, now, matches Entain’s.

More recently, Australian betting technology company BetMakers joined the party, offering $3.1 billion in cash and equity for Tabcorp’s media and sports betting arms.

Despite all the hoopla, analysts almost universally view Entain’s current offer as superior, because it’s an established operator in Australia – something Apollo is not, and it’s all cash, whereas the BetMakers bid would make Tabcorp shareholders investors in a new enterprise. It’s rumoured Tabcorp investors simply want to be rid of the lagging businesses, potentially rendering the BetMakers proposal unattractive.

Entain recently publicly urged Tabcorp to accept its offer, noting that it’s committed to the businesses, whereas Apollo may simply be looking to flip them for a profit at a later date.

Speaking publicly about its bid, Entain Australia’s chief executive Dean Shannon said Tabcorp should accept its $3.5 billion bid for the TAB bookmaking and media business or risk losing more ground to online competitors if it opts for a demerger.

“That’s going to take some time to play out, Tabcorp is losing market share – what’s it going to be worth by the time we get to a demerger?” said Mr Shannon, who runs the Ladbrokes and Neds betting brands locally.

“Our offer gives Tabcorp shareholders certainty. We’re in this position where we could possibly buy Tabcorp wagering and media because the shareholders are sick of listening to promises and not having them delivered.”

Should Entain opt to boost its offer, it’s not immediately clear what form that increase would take.

It could leverage its high-flying stock and include some in a new, higher bid, though that may not be to the liking of Tabcorp investors.

The suitor could also sell debt or equity to raise more cash and add some of the proceeds to a revised pitch for the Tabcorp assets.

What is clear is that if Entain is ultimately successful in procuring Tabcorp’s media and sports assets, an Australian sports betting juggernaut, one with almost half of the country’s sports wagering market share will be created.

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