Entain pursues Tabcorp’s floundering wagering units

Entain Plc has this morning issued a short statement confirming Australian media speculation that it has made a formal approach to acquire Tabcorp Holdings‘ ‘wagering and media’ assets. 

The FTSE100 betting group said that ‘discussions were at an early stage’ and chose not to disclose any information with regards to its valuation of Tabcorp’s sports betting assets. 

Entain stated that Tabcorp assets are in-line with its current M&A strategy, which has seen the company review an attractive business proposition to merge its existing Sportingbet franchise with Tabcorp properties – ‘creating Australia’s leading, integrated multi-channel and multi-brand wagering company‘.

Though light on substance, Entain’s bid has sent shockwaves through the Australian gambling landscape, as a transformative bid that would reshape the market.

Despite taking full control of Australian retail betting in 2017 following its merger AUS $11 billion merger with ASX rival Tatts Group, Tabcorp’s TAB wagering units have floundered year-on-year against increased competition from online competitors.

Merger difficulties saw Tabcorp investors question the firm’s long-term sustainability in carrying multiple new divisions following its enlargement with Tatts lottery, keno and wagering units.   

Frustrated investors had questioned Tabcorp’s board whether the company would execute a ‘spin-off or sale’ of non-core assets.  

To date, Tabcorp governance has maintained that the company can transform its media and wagering assets to compete with online competitors such as Flutter Entertainment’s market-leading SportsBet Australia brand.

According to company records, Wagering and Media is the company’s most lucrative division following its Lotteries and Keno operations, generating 40% of its A$5.22 billion in revenues as of June 2020.

This morning, Tabcorp released a statement noting that numerous unsolicited offers had been made for its wagering and media business. The company will update investors on ‘any serious approach’ but underlined that there is no certainty that any offer will be accepted.

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