Entain to blowout all bid competition in pursuit of TAB

Australia’s sports betting incumbents will be closely monitoring the interim results of Entain Plc, published on Thursday 8 July, to see if the FTSE100 gambling group increases its offer to acquire Tabcorp Holdings’ TAB wagering unit.

First off the mark, last February Entain launched its initial AUS $3 billion (€2bn) offer to acquire TAB’s wagering and media divisions – an offer which would be immediately rejected by Tabcorp as ‘grossly undervaluing the TAB’. 

Entain revised its offer last April to AUS $3.5 billion (€2.2bn), a bid that was neither accepted nor rejected by the Tabcorp board, as the ASX company undertakes a strategic assessment by its new Chairman Steven Gregg.

As stands, Entain is one of three suitors to have formally submitted an offer to acquire TAB,  joining US private equity fund Apollo Global – which matched Entain’s revised offer – as well as domestic incumbent BetMakers, which proposed an AUS $4 billion cash-and-shares deal to launch a new all-Australian wagering and racing enterprise. 

Australian news sources report that Entain is examining whether to return with a substantially bigger + AUS $4 billion offer to blowout its bid competition, positioning itself as the logical suitor for TAB.

The high-risk strategy is believed to be supported, as growth-hungry Entain would instantly become Australian gambling’s biggest wagering firm, securing TAB’s retail portfolio and merging its Ladbrokes Australia and Sportingbet online brands with TAB’s digital portfolio.

Tempting Tabcorp investors, Entain believes that it is the only suitor that will be capable of promptly clearing the Australian Competition and Consumer Commission (ACCC) probe of a TAB buyout for the wider interests of the country’s gambling sector.

The management and duties of funding Australian horseracing, have been deemed as a critical factor as to which party will win TAB’s sale – in which Racing New South Wales has stated that bidding parties must commit to funding guarantees as the sport adjusts to its post-COVID future.

Entain’s strategy may appeal to Tabcorp’s long-suffering investors, who will want to avoid a repeat of the ASX firm’s last M&A outing, which saw Tabcorp take two years to complete its AUS $11 billion merger with main market rival Tatts Group – a deal which has yet to deliver any of its value proposition to investors.