A demerged Tabcorp wagering and media business will likely pursue joint ventures or partnerships with ASX-listed Betmakers as part of a deal that may see it emerge with an equity stake or even make a takeover play as it seeks an international growth strategy to make it more attractive to investors.Tabcorp announced a demerger of its strongly-performing lotteries division from its struggling bookmaking arm on Monday, spurning suitors such as London-listed Entain and private equity group Apollo Global Management who had previously lobbed bids of between $3.5bn and $4bn for Tabcorp’s wagering and gaming services assets.After a months-long strategic review Tabcorp management have opted instead to split its lotteries and wagering businesses in a process set to take nine to 12 months to complete.READ NEXTLawn unto himself: NDIS fraudster gets three yearsTESSA AKERMANThe newly-announced Lotteries & KenoCo business is set to be chaired by incumbent Tabcorp chairman Steven Grigg and headed by Sue van der Merwe. Wagering & GamingCo, which will remain listed under the Tabcorp banner on the ASX, will take in Tabcorp’s existing wagering, media and gaming services.Mr Gregg admitted the bids from Entain and Apollo had been “headline numbers that we could have worked with” but that there had been “completion risk” associated with accepting an offer, which would have been subject to a string of regulatory approvals and taken far more than 12 months to undertake.He also told The Australian that “personally I think that a number closer to $4bn” could have been appropriate for the wagering and media division and “if we had got to the higher number I would have been happier with it. But we didn’t have that certainly of completion.”READ MOREunting pioneer’s $5bn Tabcorp betBut Entain – the owners of the Ladbrokes and Neds brands in Australia – hit out at Mr Gregg and the Tabcorp board and said its $3.5bn cash bid, raised from $3bn earlier this year, was never taken seriously.“Entain’s $3.5bn all-cash proposal offered compelling value for shareholders. It sees no reason to put forward a higher proposal,” an Entain spokesman said. “It’s difficult to reconcile how walking away from Entain’s $3.5bn all-cash offer is consistent with maximising shareholder value. [Monday’s] announcement comes without meaningful engagement with Entain or any offer of due diligence”Mr Gregg disagreed, saying that the demerger announcement did not rule out a future tilt for Tabcorp by an interested party and that he and his board “had engaged with [Entain] quite properly”.Long-serving Tabcorp CEO David Attenborough will remain at the helm until the demerger is completed. Picture: Britta CampionLong-serving Tabcorp CEO David Attenborough will remain at the helm until the demerger is completed. Picture: Britta Campion“They were given information and management presentations, and we had dialogue with their advisers and them both locally and internationally. They were given every opportunity.”The demerger move satisfies Tabcorp shareholders such as Anton Tagliaferro of Investors Mutual, who controls about 3 per cent of Tabcorp stock and predicted the lotteries business could trade at 18-20 times earnings freed from being in the same entity as the wagering division.While Mr Tagliaferro said the wagering business had potential for growth as its own business it is continuing to lose market share to digital corporate bookmakers such as Sportsbet, Ladbrokes and Bet365, as investors have driven up the share price of US-focused stocks such as Pointsbet.But Mr Gregg said Tabcorp would seek “creative and thoughtful ways” to continue engaging with BetMakers, a business-to-business betting technology group that has seen its share price surge in the past year after striking a series of deals in the fast-growing and hugely lucrative US market that is now opening up to online wagering for the first time.BetMakers also has digital wagering pioneer Matthew Tripp, the former boss of Sportsbet and BetEasy, on board as a consultant tasked with sourcing deals.Mr Tripp and BetMakers in May unveiled a $4bn plan to combine BetMakers with Tabcorp’s wagering business, and while Mr Gregg said that deal was not in the best interest of Tabcorp shareholders he noted that BetMakers had international assets with good prospects.“I think Matt Tripp is a good operator and BetMakers has a few different interesting assets that we could look at in a couple of capacities,” Mr Gregg said.“Maybe there’s an avenue there that could be a big win for Tabcorp shareholders in entering into some sort of arrangement with BetMakers and with Matt. We will keep an open mind.“International markets have taken off, particularly in the [United] States, and being part of that growth story is a good thing. Doing that in a smart way could be good for Tabcorp.”Mr Gregg said both businesses would emerge with “investment grade balance sheets” and that the lotteries business could also search for acquisition opportunities overseas.He also paid tribute to Ms van der Merwe, who will likely emerge as the chief executive of a group close to the ASX50. “She is one of those people who are under the radar and just get things done. Investors who know her and that business rate her very highly.”
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unting pioneer’s $5bn Tabcorp betBut Entain – the owners of the Ladbrokes and Neds brands in Australia – hit out at Mr Gregg and the Tabcorp board and said its $3.5bn cash bid, raised from $3bn earlier this year, was never taken seriously.“Entain’s $3.5bn all-cash proposal offered compelling value for shareholders. It sees no reason to put forward a higher proposal,” an Entain spokesman said. “It’s difficult to reconcile how walking away from Entain’s $3.5bn all-cash offer is consistent with maximising shareholder value. [Monday’s] announcement comes without meaningful engagement with Entain or any offer of due diligence”Mr Gregg disagreed, saying that the demerger announcement did not rule out a future tilt for Tabcorp by an interested party and that he and his board “had engaged with [Entain] quite properly”.Long-serving Tabcorp CEO David Attenborough will remain at the helm until the demerger is completed. Picture: Britta CampionLong-serving Tabcorp CEO David Attenborough will remain at the helm until the demerger is completed. Picture: Britta Campion“They were given information and management presentations, and we had dialogue with their advisers and them both locally and internationally. They were given every opportunity.”The demerger move satisfies Tabcorp shareholders such as Anton Tagliaferro of Investors Mutual, who controls about 3 per cent of Tabcorp stock and predicted the lotteries business could trade at 18-20 times earnings freed from being in the same entity as the wagering division.While Mr Tagliaferro said the wagering business had potential for growth as its own business it is continuing to lose market share to digital corporate bookmakers such as Sportsbet, Ladbrokes and Bet365, as investors have driven up the share price of US-focused stocks such as Pointsbet.But Mr Gregg said Tabcorp would seek “creative and thoughtful ways” to continue engaging with BetMakers, a business-to-business betting technology group that has seen its share price surge in the past year after striking a series of deals in the fast-growing and hugely lucrative US market that is now opening up to online wagering for the first time.BetMakers also has digital wagering pioneer Matthew Tripp, the former boss of Sportsbet and BetEasy, on board as a consultant tasked with sourcing deals.Mr Tripp and BetMakers in May unveiled a $4bn plan to combine BetMakers with Tabcorp’s wagering business, and while Mr Gregg said that deal was not in the best interest of Tabcorp shareholders he noted that BetMakers had international assets with good prospects.“I think Matt Tripp is a good operator and BetMakers has a few different interesting assets that we could look at in a couple of capacities,” Mr Gregg said.“Maybe there’s an avenue there that could be a big win for Tabcorp shareholders in entering into some sort of arrangement with BetMakers and with Matt. We will keep an open mind.“International markets have taken off, particularly in the [United] States, and being part of that growth story is a good thing. Doing that in a smart way could be good for Tabcorp.”Mr Gregg said both businesses would emerge with “investment grade balance sheets” and that the lotteries business could also search for acquisition opportunities overseas.He also paid tribute to Ms van der Merwe, who will likely emerge as the chief executive of a group close to the ASX50. “She is one of those people who are under the radar and just get things done. Investors who know her and that business rate her very highly.”
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