A few people puffing their chests out- Betmakers have a bit of work to do to convince TAH shareholders its a good deal.
From the AFR written by James Thomson-
‘Bunch of promises’: Tabcorp bidder takes swipe at rival
The local chief of bookmaking giant Entain has lashed one of his rivals in the race to buy Tabcorp’s wagering and media business, labelling BetMakers “a bunch of promises” and declaring only Entain can offer Tabcorp investors and the racing industry certainty.BetMakers lobbed a $4 billion bid to Tabcorp’s wagering arm on Friday, besting Entain’s $3.5 billion bid. A third offer from New York-listed private equity firm Apollo Management would see Tabcorp shareholders receive $3.5 billion for the wagering and media arm and another $500 million for its gaming services division.Three bidders are in the race for Tabcorp. GettyBut where BetMakers has offered $1 billion in cash and $3 billion in BetMakers shares, the offers from Entain and Apollo are all cash.BetMakers’ push is being led by Matt Tripp, who invested $25 million in the business in February and was granted an options package worth more than $100 million as an incentive to land a transformational deal for the business.Entain’s Australian CEO, Dean Shannon, says while BetMakers may be a promising business, its future was far from certain compared to Entain, which has established operations in Australia and around the world and a market value of $17.7 billion.
“I think the offer is very ambitious. To me it’s just still a bunch of promises,” he said of BetMakers. “When you compare that to an all-cash bid, our offer is compelling.“We’re not private equity; they’ll get the business and flip it. Matt Tripp’s a deal maker and perhaps he’ll flip it at some point.“We don’t need to do a deal and get out in two years. We want to own this business forever. We want to be number one in every regulated market we can be in.”Tabcorp chairman Steven Gregg is yet to make a call on any of the bids. He is running a strategic review of the group that will consider a trade sale of the wagering and media division and demergers of either the wagering arm or Tabcorp’s lotteries arm, which has delivered strong earnings growth in recent years.The strategic review is expected to be completed by late June or early July and investors appear prepared to wait on the results of the review.Mr Shannon said he would love to have been granted due diligence by Tabcorp, but understands the board wants to complete its review.“We have some communications with them, of course we’d like more, but we’re respecting the process right now.”BetMakers’ position worsened on Monday when its shares fell another 13 per cent to $1.16. The group’s market value has fallen 27 per cent since the announcement of the bid, to $946 million.BetMakers strategic adviser Matthew Tripp is a “deal maker”, according to Entain’s local chief. Jesse MarlowAnalysts split each wayMarket views on BetMakers’ pitch differ. Canaccord Genuity analyst Benn Skender said he believed “the funding structure and experience of the parties involved on the BetMakers side arguably increases the executability of a deal from a timing and regulatory perspective” compared to the bids from Entain and Apollo.But he cautioned Tabcorp investors would need to get comfortable about the potential upside for the merged entity.MST analyst Rohan Sundram said the structure of the BetMakers proposal “will struggle to win over the Tabcorp board and shareholders over the compelling hard cash offers on the table from Entain and Apollo”.Mr Shannon said he believed Entain’s local success and its global expertise can help to turn Tabcorp’s wagering business around after a period of disruption caused by Tabcorp’s merger with Tatts Group, intense competition in the wagering market and the coronavirus pandemic.“One of the challenges that I think Tabcorp faces is keeping up with the advancement of technology and the corporate bookmakers,” he said.“I believe me and my team have punched above our weight in terms of product innovation and giving the customer what they want.“Tabcorp does need an injection of forward thinking. The fact the wagering and media business is in play … is because Tabcorp shareholders have been promised change for a number of years now and those changes haven’t come to fruition.”Mr Tripp’s strong relationships with the racing industry are considered a big advantage for BetMakers, but Mr Shannon said he was confident Entain’s 140-year history and its experience running retail outlets would give participants confidence that the vital funding stream it receives through the wagering business would be maintained.“Tabcorp is such an important part of industry funding and that’s something we can give them a lot of certainty on,” he said.“All the racing bodies know that I like to drive innovation and really try to capture the imagination of the customer. I want to work out ways to grow the size of the market, not just market share.”RELATEDMatt Tripp’s Tabcorp bonanzaMr Shannon said Entain could match BetMakers’ pitch around taking Tabcorp’s product to international markets, but this was not his focus.“The reality is, so what? It doesn’t help Tabcorp in Australia; it doesn’t help the racing industry in Australia. It’s a distraction to that, if anything.”
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