Entain Plc has emerged as the first suitor to announce its interest in acquiring the TAB racing and sports betting unit of Tabcorp Holdings, tabling an all-cash bid of AUS $ 3 billion (£ 1.9 bn) to take ownership of the underperforming firm.
The cash offer from the FTSE100 business reflects, it said, the ‘market valuation’ put on Tabcorp’s wagering unit by ASX analysts.
Bid likely to be rejected
However, the Australian Financial Review (AFR.com) announced that Tabcorp, which is seeking a minimum valuation of AUS $3.5 billion (EUR 2.15 billion) for TAB, which holds a range of exclusive wagering rights within the six states of Australia, is likely to refuse Entain’s opening bid.
The emphasis remains on the company board of Tabcorp, headed by new chairman Steven Gregg, who has yet to determine if the company can break its assets two years after its $11 billion AUS merger with main market rival Tatts Group.
As well as having Tabcorp circled by rivals and private equity firms looking to buy its offcuts, the cumbersome deal has struggled to deliver value for investors.
Entain aims to combine TAB units with its Australian online portfolio of Neds, Ladbrokes and Bookmaker AUS brands straight to bat with its all-cash bid, replacing the Sportsbet brand of FTSE competitor Flutter Plc as the online market leader.
TAB funding duties
However, the Australian Competition and Consumer Commission (ACCC) has warned all TAB suitors that an agreement would bear considerable due diligence as the winning party will have to secure TAB horse racing funding duties and distribution network rights across the six states of Australia, maintaining individual gambling laws.
As Tabcorp Holdings prepares to release its 2020/2021 Interim Results today, a decision on whether TAB will be sold is anticipated imminently.