The interim results of Entain Plc, released on Thursday 8 July, will be eagerly watched by Australia’s sports betting incumbents to see if the FTSE100 gaming giant strengthens its offer to buy Tabcorp Holdings’ TAB wagering subsidiary.
To begin Entain announced interest in TAB with an AUS $3b offer to buy TAB’s wagering and media businesses in February of last year, an offer that Tabcorp quickly rejected as “grossly undervaluing the TAB.”
Last April, Entain updated its offer to AUS $3.5 billion (€2.2 billion), a bid that the Tabcorp board did not accept or reject as the ASX company undergoes a strategic assessment by its new Chairman Steven Gregg.
One of three bidders
As things stand, Entain is one of three bidders for TAB, alongside US private equity firm Apollo Global, which matched Entain’s updated offer, and domestic incumbent BetMakers, which suggested an AUS $4 billion cash-and-shares deal to build a new all-Australian wagering and racing operation.
According to Australian press sources, Entain is considering making a significantly larger + AUS $4 billion offer in order to outbid the rivals and present itself as TAB’s natural suitor.
The high-risk strategy is expected to succeed, as Entain would become Australia’s largest wagering company overnight, securing TAB’s retail portfolio and integrating its Ladbrokes Australia and Sportingbet online brands with TAB’s digital portfolio.
Entain is courting Tabcorp investors, believing it is the only bidder capable of clearing the Australian Competition and Consumer Commission (ACCC) inquiry of a TAB acquisition in the country’s gaming sector in a timely manner.
The administration and responsibilities of supporting Australian horseracing have been judged a crucial aspect in determining who would win TAB’s sale, with Racing New South Wales stating that bidding parties must agree to funding guarantees as the sport changes to its post-COVID future.
Entain’s strategy may appeal to Tabcorp’s long-suffering shareholders, who will want to avoid a repeat of the ASX firm’s last M&A venture, which saw Tabcorp take two years to complete its AUS $11 billion merger with main market rival Tatts Group – a deal that has yet to deliver any of the deal’s value proposition to shareholders.