Entain boss Dean Shannon tells Tabcorp: ‘Let us fix’ wagering business as part of ‘compelling’ $3.5bn bid

Entain’s Australian head Dean Shannon has urged Tabcorp to accept his $3.5bn cash offer for its wagering and media arms.

Dean Shannon says the $3.5bn Entain offer is the easiest and most compelling option for the Tabcorp board.

Entain’s Australian head Dean Shannon has urged Tabcorp to accept his $3.5bn cash offer for its wagering and media arms, saying the bid has the “highest probability” of success and a demerger would do little to fix the underperforming betting business.

Speaking for the first time since Entain’s initial $3bn bid – now increased to $3.5bn – lobbed in February, Mr Shannon said his company’s offer should be considered the easiest and most compelling option for the Tabcorp board.

London-listed Entain is competing with private equity firm Apollo Global Management — which has made the same $3.5bn bid and offered an additional $500m for Tabcorp’s gaming services arm — and a $4bn cash and scrip bid from ASX-listed BetMakers and digital betting pioneer Matthew Tripp’s.

“We are the natural end holders of a business like Tabcorp,” Mr Shannon said. “Something like private equity means uncertainty for the racing industry. Any of these other deals are private equity of a type as well. They may exit after a few years time. We can offer that long-term certainty.

“It is a very strong offer at $3.5bn. Cash is always less complicated than anything else. We believe we have the highest probability of success, particularly with the racing industry.”

Mr Shannon’s business owns the Ladbrokes and Neds brands in Australia, with about 80 per cent of their customers betting on racing.

Tabcorp, via its joint ventures with various state regulators, is the biggest funder of racing in Australia, but it is losing market share to digital-savvy rivals like Mr Shannon and market leader Sportsbet.

The Tabcorp board is said to be leaning towards a demerger of its strongly performing lotteries business, leaving the wagering and related business standing alone. But Mr Shannon said that move would do little to help fix Tabcorp’s struggles compared to its fast-growing competitors who have thrived as COVID-19 drove more punters online.

“It doesn’t really fix any problems that Tabcorp has right now,” he said. “It is going to take a similar amount of time to get approvals and get it done and when you’re losing market share what is [the business] going to be worth at the end of that? I think from a Tabcorp shareholder point of view, here is $3.5bn – take it. Let us fix it, let us do what we need to do.”

While Mr Shannon has two other competitors, he would not say if Entain would lift its bid, despite market speculation an offer of $4bn or more might be necessary to prise the wagering division off Tabcorp.

“Our focus now is our offer, at $3.5bn,” he said. “It is a straightforward cash offer and it is compelling offer. We think it is an offer that Tabcorp board members should recommend to their shareholders.”

He also dismissed suggestions he would struggle in comparison with the highly credentialed Mr Tripp in gaining the support of racing bodies.

“Everybody in the racing industry knows me as someone who is forward thinking and I’ve definitely innovated in that space since I came into it,” he said.

“I pushed our business and in turn pushed our competitors to grow the market. I think the racing industry recognises that.”

Mr Shannon stressed he had a good relationship with Racing NSW chief executive Peter V’landys, who looms as a kingmaker given any Tabcorp transaction requires regulatory approvals.

“I have known Peter for 20 years and the thing that Peter and I have most in common is we are very focused on the customer,” he said.

“He gets me and I get him. Peter will be looking for a long-term solution for the racing industry and what is best for Racing NSW. I think I can work with Peter to achieve that.”

Mr Tripp, a former boss of Sportsbet and BetEasy (formerly CrownBet) in Australia, revealed the $4bn bid with BetMakers on Friday. BetMakers shares fell 16.25 per cent on Friday and another 13 per cent on Monday.

Mr Tripp said Mr Shannon’s firm had not “really proven themselves” in Australia and questioned its profitability.

But Mr Shannon said his businesses had been profitable for seven years.

“I think he might have confused us with CrownBet or Bet­Easy, perhaps,” he said. “Certainly not us. We are doing very well in the Australian market, and we continue to do well this year.”

Mr Shannon said he would work to fix Tabcorp’s technology and improve its digital customer offering and that he respected the process of the Tabcorp board undertaking a strategic review.

He said Tabcorp’s TAB brand, used on its retail betting shots and digital app, would be the “marquee” offering in the Entain stable should his bid succeed, with the Ladbrokes and Neds brands maintained.

“It has tremendous brand awareness and it becomes our marquee brand,” he said.