Odds shorten on Tabcorp bidding war after new $4bn tilt
A bidding war has broken out for Tabcorp's wagering division and other units of the business, with the price of the combined assets set to surge above $4bn.
Private equity giant Apollo Global Management lobbed a $4bn bid for Tabcorp's wagering, media and gaming services units, upping the stakes in the race for Tabcorp's gambling-focused businesses.
The Apollo bid, announced to the ASX by Tabcorp, is likely to bring a fresh tilt at Tabcorp by global wagering business Entain and a consortium led by digital wagering pioneer Matthew Tripp.
Apollo's bid also includes an alternative $3.5bn proposal for Tabcorp's wagering and media businesses only, the same figure Entain, the London-listed owner of the Ladbrokes and Neds brands in Australia, recently lobbed for the two divisions.
Meanwhile, Mr Tripp, the one-time boss of Sportsbet and BetEasy in Australia, has been working on a proposal that could include combining the ASX-listed BetMakers data and technology business with the Tabcorp wagering and media assets. BetMakers has been making a big push into the fast-growing US wagering market and passed the $1bn market capitalisation mark this week.
Headed by chairman Steven Gregg, Tabcorp's board is said to favour separating its wagering assets away from its strongly-performing lotteries division, probably by spinning off the latter into a newly-formed ASX entity. It has been working on a strategic review, with input from UBS.
"The Tabcorp Board has not yet formed a view on the merits of the revised [Apollo] proposal and will assess it in the context of the previously announced strategic review," Tabcorp said in a statement to the ASX.
"The revised proposal is subject to numerous conditions including due diligence, arranging financing, receipt of all relevant regulatory approvals and obtaining various third party approvals and consents."
In the statement, Tabcorp said that the "objective of the strategic review is to assess and evaluate all structural and ownership options to maximise the value of Tabcorp's businesses for the benefit of shareholders."
"These options may include a potential sale of the wagering & media business to a third party or a potential demerger of either the wagering & media business or the lotteries and keno business."
The belief among Tabcorp directors had been that a demerger or separation of the wagering unit is a far easier and potentially more lucrative transaction to undertake is likely to hold until the strategic review is finalised towards the end of June, unless Entain or other bidders return with a higher offer.
But the new bid, and the likelihood or further action, could force the Tabcorp' boards hand into eventually accepting one of the bids.
Mr Tripp has been stalking Tabcorp for several months with potential private equity involvement and recently struck a strategic advisory and shareholding deal with Betmakers as part of a $75m raising.
Fox Corporation, headed by billionaire Lachlan Murdoch, and its FOX Bet brand is also understood to have been interested in being part of Mr Tripp's plans and an involvement in the Australian wagering market.
Mr Tripp is said to believe a combined Tabcorp and Betmakers business would be a compelling proposition, with Betmakers finalising the $56.2m acquisition of Sportech in April, which includes a US tote business and white label digital betting division that has more than 25 customers across North America using its services.
Meanwhile, Entain management believes the London-listed company has the financial power and digital betting acumen to win any bidding race, though it is now likely to have to increase its last bid in order to compete with Apollo.
Mystery surrounds the Apollo bid, with the regulatory approval process, which runs across states and territories and government and sporting bodies, likely to be lengthy.
Mr Gregg has previously said that the Tabcorp board was more likely to seriously consider a bid if regulatory approval was thought to be more likely.
"[It] has got to accompany a certainty of completion. And the offers that we have got, even from the credible sources, have been highly conditional," Mr Gregg said.
"Therefore we just need to handicap how much risk there is in a deal happening. There's no use having a huge number on it if it can't happen. Then it's not worth anything, so we have to put a lot of judgment around it."
Apollo may choose to maintain most of the current Tabcorp wagering management, though Tabcorp's long-serving chief executive David Attenborough has announced he is stepping down after a decade in the role.
Mr Attenborough is likely to leave the company after the strategic review has been finished.
Originally published as Odds shorten on Tabcorp bidding war after new $4bn tilt