Suitors seeking a break-up of the wagering and media properties of Tabcorp Holdings would have to clear a range of regulatory barriers to complete a transaction.
Closely monitoring developments
The Australian Competition and Consumer Commission (ACCC) has reported that it is ‘closely monitoring developments’ in a case that is likely to change the Australian wagering landscape as more parties announce their interest in bidding to acquire TAB.
The wagering unit of Tabcorp was valued at + AUS $ 3 billion (€ 1.9 bn) by ASX analysts. However, the winning bidder will have to convince the ACCC that any purchase is in Australian racing’s interest, complies with individual state wagering laws, and respects TAB retail contracts.
The acquisition would not necessarily come down to who wins the bidding war for the underperforming asset of Tabcorp, due to the complexities associated with a TAB takeover.
While no suitor has made a formal offer to Tabcorp, a diverse cast of betting companies, private equity groups and market magnets circling TAB are noted by ASX observers.
‘Racing will be the kingmaker of a TAB deal’
In response to reports of a possible break-up of Tabcorp, the Sydney Morning Herald (SMH) quoted outspoken Peter V’landys, Racing New South Wales (Racing NSW) Chief Executive, as saying that ‘racing will be the kingmaker of a TAB deal’
He pointed out that any TAB solution would have to meet the needs of Racing NSW-a requirement that would ‘not be taken lightly’ as Australian racing navigates its future post-Covid.
V’landys also warned stakeholders that the racing industry would not sit quietly and allow its future TAB financing obligations to be negotiated behind closed doors.
In addition to performing racing duties, renegotiating TAB retail network and totalisator terms across Australia’s six states, which comply with individual gambling legislation, would likely require a competitive bid.
Overhaul of TAB the retail structures
The due diligence of the acquisition will illustrate the post-merger difficulties of Tabcorp in overhauling the retail structures of TAB across Australia, which is considered a challenging undertaking for any suitor.
In the meantime, TAB’s future will be weighed by a Tabcorp board headed by new Chairman Steven Gregg, who succeeded Paula Dwyer last November, who ended her 20-year tenure heading the corporate governance duties of the ASX group.
Gregg heads Tabcorp’s global executive quest for a new Chief Executive, taking over duties, as long-term incumbent David Attenborough will resign this year.
The Tabcorp board has previously indicated that it does not plan to break up the business into separate units, despite the investor backlash in failing to deliver its post-Tatts merger growth.
Investor pressure has been put on Gregg and the new Tabcorp board to show a fresh vision of the heritage gambling company in its post-Dwyer/Attenborough era, regardless of TAB buyout interest.