Written By Bren O'Brien
Tabcorp has rejected offers from several potential investors which valued the wagering and media aspect of its business at $3 billion but has also confirmed it is undertaking a review which could see the business split up and sold off in the future.
In a statement to the Australian Stock Exchange, Tabcorp addressed market speculation after it had been approached by several parties looking to secure the wagering and media aspect, which includes its retail and digital wagering business as well as media assets, including Sky Racing.
The parties reportedly involved in putting forward offers were Entain, which owns the Ladbrokes and Neds wagering businesses in Australia, private equity giant Apollo Global Management, and a third group, advised by Goldman Sachs and reportedly headed by former Sportsbet CEO Matt Tripp.
Any sale or split up of Tabcorp's business would have a significant impact on the thoroughbred industry, with Tabcorp the major wagering and media player in Australia. It holds a retail monopoly on pari-mutuel wagering across most of Australia through its TAB brand, while Sky Racing is the major rightsholder and broadcaster for every state apart from Victoria and South Australia.
Tabcorp holds joint-venture agreements with major racing bodies to operate its retail monopoly and these have been a major source of funding for thoroughbred racing. Its current exclusive agreement in Victoria ends in 2024, while it continues in New South Wales until at least 2033.
Tabcorp confirmed that the offers put forward had put a value on the wagering and media business of circa $3 billion, which it felt fell short of what it was worth.
It has, however, forced Tabcorp to revisit its strategic objectives and it will undertake a 'review to assess and evaluate all structural and ownership options to maximise the value of Tabcorp’s businesses for the benefit of shareholders'.
Tabcorp said the options could be a potential sale of wagering and media to a third party, or possibly a demerger of the $10 billion business, which also includes the Lotteries and Keno and Gaming Services segments.
“The assessment of Tabcorp’s strategic and ownership options includes, but is not limited to, a demerger or sale of one or more of our businesses. Our clear objective is to ensure that we fully maximise the value of Tabcorp’s gambling entertainment businesses for our shareholders,” Tabcorp Chairman Steven Gregg said.
“Our clear objective is to ensure that we fully maximise the value of Tabcorp’s gambling entertainment businesses for our shareholders.” - Steven Gregg
The strategic review has put a halt to the search for a new Tabcorp Managing Director & Chief Executive Office with incumbent David Attenborough to continue in that role in the short term.
The current incarnation of Tabcorp was formed in late 2017 with the merger of Tabcorp Holdings and the Tatts Group. Having overseen that integration, Tabcorp is now looking for its next strategic move.
Several major shareholders in Tabcorp have been calling for a demerger, with the wagering and media business the most obvious offshoot.
The media and wagering business delivered around 37 per cent of Tabcorp's EBITDA of around $1 billion last financial year, while the lottery business represented around 55 per cent of its 2019/20 EBITDA.
Tabcorp revealed last month that earnings from wagering and media fell three per cent in the six months to December 3. COVID-19 shutdowns in 2020 had seen a shift away from retail (turnover down 28 per cent) towards online betting (up 43 per cent).
