Hot pursuit is on for Tabcorp shake-up

The board of Tabcorp Holdings is reportedly reviewing a number of individual offers and options from companies looking to acquire its TAB wagering and media units.

Grabbing yesterday’s business headlines, FTSE100 Entain Plc revealed its interest to acquire TAB units and merge the heritage betting brand with its active Australian market portfolio. 

Despite its public announcement, Entain chose not to disclose any information with regards to its valuation of Tabcorp’s wagering subsidiary. Following this, further suitors have come out of the woodworks seeking to tempt Tabcorp to offload its TAB unit. 

The Australian Financial Review (AFR.com) reports that Melbourne-based private equity fund Tanarra Capital is ‘forming a consortium’ in a bid to break up the ASX gambling group.

A current investor of Tabcorp, Tanarra is led by Australian corporate finance magnet John Wylie who has previously led calls for the company to be broken up, unleashing the potential of the firm’s individual lottery and sports betting units.

Wylie leads Tanarra fresh from raising $1.5 billion in funding capital this January, with his PE firm actively targeting ‘underperforming Australian and New Zealand public companies’.

Despite recording year-on-year declines, TAB wagering units reported 2019/2020 earnings of AUS $380 million, with analysts valuing Tabcorp’s assets at a range of AUS $2.5-3 billion range (€1.5-2bn).

Raising the stakes, The Australian this morning identified US private equity funds Blackstone and Morgan Stanley ‘Infrastructure Partners’ as additional TAB suitors – with Blackstone reported to be preparing an AUS $3 billion bid to acquire Tabcorp’s wagering unit.

A highly active investor within global gambling, Blackstone has significantly expanded its gambling portfolio in recent years by investing and acquiring leading regional players such as MGM Resorts (USA), Grupo CIRSA (Spain), Superbet (Romania) and Gamenet (Italy).

Tabcorp maintains that wagering underperformance has been a result of post-merger difficulties, in which the ASX group was forced to integrate Tatts UBET sportsbook units with TAB systems – losing market share to online competitors. 

Withstanding investor pressure, Tabcorp’s board has rejected all attempts to break-up the company, stating that the firm would deliver its true value once assets were fully integrated.