Matthew Tripp plans to combine Tabcorp with Betmakers in $5bn deal

Digital betting pioneer Matthew Tripp has been stalking Tabcorp for months for a chance to unleash a plan worth as much as $5bn to shareholders.

Matthew Tripp plans to combine Tabcorp and Betmakers assets to create a digital betting powerhouse.

Digital betting pioneer Matthew Tripp plans to merge a spun-off Tabcorp wagering division with the ASX-listed Betmakers data and technology business in a deal that could unlock $5bn in value for shareholders.

Mr Tripp, the former Sportsbet and BetEasy boss, 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.

But in a plan that the Tabcorp board is aware of, Mr Tripp would head a combined Tabcorp wagering and Betmakers entity that would rejuvenate its digital division in Australia and seek a bigger presence in the lucrative and fast-growing US online wagering market.

Fox Corporation, headed by billionaire Lachlan Murdoch, and its FOX Bet brand is also understood to be interested in being part of Mr Tripp’s plans, which will be pitched against global giant Entain – the owner of the Ladbrokes and Neds wagering brands in Australia – and its $3bn preliminary tilt for Tabcorp’s wagering arm.

US private equity firm Apollo Global Management is also understood to be interested, with Tabcorp chairman Steven Gregg declaring there are “no sacred cows” as the gaming company mulls finally demerging its wagering business and on Monday rebuffed a $3bn takeover offer from British rival Entain.

Matthew Tripp has headed SportsBet and BetEasy in the past..

Mr Gregg, who succeeded Paula Dwyer as chairman in January, said the company was embarking on a strategic review expected to take at least 10 weeks. All options about the company’s future will be considered with Mr Tripp and Entain now leading the race.

There has been much speculation about Mr Tripp’s involvement in a Tabcorp play, first revealed by The Australian in November, with Mr Gregg admitting the pair had met while calling for Mr Tripp to come up with a concrete proposal.

“Matt is talking to everybody and he has talked to me on a few occasions. And I said, ‘Matt, if you’d like to come to me with a proposal, you’re most welcome to’. He’s a nice guy, but so far we haven’t seen anything of such a proposal. I’m sure he’d like to run Tabcorp or buy Tabcorp but he has got to stump up. There is an open dialogue there, but that’s about it.”

Tabcorp shareholder Anton Tagliaferro, the investment director of Investors Mutual, which controls about 3% of Tabcorp, welcomed the prospect of Mr Tripp heading a demerged wagering and media business.

The search for a new CEO to replace David Attenborough will be put on hold pending the outcome of the review. Picture: Britta Campion

“I think that would be a very positive advancement if that occurred because he has a very good track record and he has shown an interest in turning that side of the business around. It would be a major positive,” Mr Tagliaferro told said.

“If you demerged the wagering and media entity it’s obviously got to have the appropriate management, the best positive management to take the company forward. The best thing to do is get the best people running it.”

Mr Tripp is said to believe a combined Tabcorp and Betmakers business would be a compelling proposition, with Betmakers poised to finalise 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.

Betmakers shares have surged 970% in 12 months and closed up 6c or 5.94% on Monday. Tabcorp shares fell 13c to $4.69.

Meanwhile, Entain management believe the London-listed company has the financial power and digital betting acumen to win any bidding race.

UK group Entain is also pursuing Tabcorp.

An Entain spokesman said the company “welcomed” Tabcorp’s strategic review but still believed it was well placed to take over the wagering and media business.

“Entain welcomes the announcement of Tabcorp’s strategic review and the opportunity it presents for investors to weigh up the certainty of its proposal to acquire the Tabcorp wagering and media business against a demerger, which is simply the status quo option.

“Entain is confident an acquisition of the business represents the most attractive pathway to value realisation for investors and that its business is a clear and obvious choice as a strong, long-term partner for Australian racing.

“As an established and leading operator in Australia, Entain is uniquely positioned to get a deal done. It is absolutely committed to growing the overall racing market and to strengthening the funding outcomes for Australia’s racing industry.”

Tabcorp chief executive David Attenborough, who was expected to retire, will stay on throughout the review and will not step down until it has a more certain future. That could involve spinning off Tabcorp’s troubled wagering and media division from its more lucrative lotteries business.

Tabcorp shareholders could receive equal shareholding in a newly listed wagering entity or take cash for their stock, while maintaining shares in a lotteries specific business.

“There is a lot of work needed to be done but the aim here is to give shareholders the best outcome possible – whatever it is. There are no sacred cows,” Mr Gregg said.

“It’s going to take about 10 to 12 weeks, roughly. I don’t want to be prescriptive because things can come out of left field. But we are looking around the year end’s result, ballpark. It’s not that far off.”

Tabcorp received a $3bn bid for its wagering and media division eight weeks ago. Since then it has received other offers, with private equity companies such as Apollo and Blackstone and possibly US casino groups and even rival Flutter, owner of Sportsbet, in the mix.

Mr Gregg declined to disclose the exact number but confirmed it was fewer than five, but said all offers had been highly conditional and therefore not sufficient to recommend to shareholders.

“We have had several (offers), some of which are serious in that they have been committed to paper, some aren’t that serious and are just full of talk.

“The industry is full of talk. It likes chatting.”

The understanding is that the Tabcorp board has aspirations to achieve a price of at least $3.5bn – $500m more than Entain’s bid.

But asked if Tabcorp has a “magic number” in mind, Mr Gregg said: “[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.

“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.

“A high number has got to accompany a high level of completion”.