Entain Plc released a short statement Tuesday morning confirming Australian media speculation that it has made a formal approach to acquire the ‘wagering and media’ properties of Tabcorp Holdings.
The FTSE100 betting community claimed that ‘discussions were at an early stage’ and agreed not to reveal any data on its valuation of the sports betting assets of Tabcorp.
Inline with M&A strategy
Entain said Tabcorp assets are in line with its new M&A strategy, which has seen the company examine an enticing business plan to combine its current Sportingbet franchise with Tabcorp properties,’ creating Australia’s leading, integrated multi-channel and multi-brand wagering company‘.
While short on substance, as a disruptive bid that would reshape the industry, Entain’s offer has sent shockwaves through the Australian gambling landscape.
Floundering waging units
Tabcorp’s TAB wagering units have floundered year-on-year amid increased competition from online rivals, despite taking complete ownership of Australian retail betting in 2017 after its AUS $11 billion merger with ASX rival Tatts Group.
Merger problems saw Tabcorp investors doubt the company’s long-term viability in carrying several new divisions after its expansion with Tatts lottery, keno and wagering units.
Frustrated investors had questioned whether the company would conduct a ‘spin-off or sale’ of non-core assets by Tabcorp’s board.
Media and wagering assets
Tabcorp management has maintained to date that the company will turn its media and wagering assets to compete with online rivals such as the market-leading SportsBet Australia brand of Flutter Entertainment.
Wagering and Media is the most profitable division of the group after its Lotteries and Keno operations, according to company records, generating 40 percent of its A$5.22 billion in revenues as of June 2020.
Tabcorp also issued a statement noting that several unsolicited offers for its wagering and media company had been made. The business would inform investors on ‘any serious approach’ but emphasised that there is no guarantee of accepting any bid.