Apollo emerges as one of three suitors keen to punt on Tabcorp

Tabcorp is understood to have fielded three offers from buyers of its assets in the space of weeks. Picture: Getty Images

The $10bn betting giant Tabcorp is understood to have fielded three offers from buyers of its assets in the space of weeks.

DataRoom understands the break-up proposal from a party about two weeks ago was in fact from Apollo Global Management and it involved an offer where it would buy all of the company except the lotteries operation.

This includes wagering and media and its gaming services division, although it remains unclear whether the bid also involved the Keno business, played in clubs and pubs in Victoria.

The gaming services unit is estimated to be worth about $500m, while analysts say wagering and media, which includes the Sky Racing Channel and Australia’s biggest multichannel wagering brand, TAB, is likely to be worth about $3bn.

Digital betting pioneer Matthew Tripp is understood to have come to Tabcorp’s board with an offer to buy the wagering operations at the beginning of January, straight after Steven Gregg had begun his role as the company’s chairman.

Exactly when the offer for the wagering and media unit from Ladbrokes owner Entain landed remains unclear.

It comes after DataRoom revealed last week that Tabcorp had received a proposal for a break-up of the company, comprising cash and scrip.

Apollo, advised by Jefferies, is understood to have offered cash for the part of the business it wanted, while the scrip component may have related to the lotteries arm.

Entain is understood to have initially offered cash for the wagering and media arm, but Tabcorp was said to have shared concerns about shareholders being unable to capitalise on the recovery of the business that has been hard hit amid the pandemic.

After negotiations with Tabcorp and advisers, Entain came back with an offer involving the payment through CHESS Depositary Interests, along with a cash component.

 

Tripp’s offer is understood to have come with questions surrounding funding capability.

The view among some was that the offer, likely backed by private equity, was opportunistic.

Entain is advised by Macquarie Capital and Morgan Stanley, while Apollo is working with Jefferies and Tabcorp counts UBS as its defence adviser.

Citi may also be involved with one of the bidders.

The revelations come as Tabcorp faces pressure to disclose details about the offer or launch a sales process for its wagering arm after it last week confirmed reports about a proposal.

Tabcorp told the market on Tuesday it had received “a number of unsolicited approaches in relation to a potential transaction involving Tabcorp’s wagering and media business”.

At the time, Tabcorp said the proposals were confidential, indicative, non-binding and subject to conditions, including due diligence, financing and regulatory approvals.

Tabcorp said its board was assessing the proposals.

Ladbrokes is understood to have been running the ruler over Tabcorp for the past 18 months, while Apollo is understood to have been also looking at Tabcorp for a long time.

The private equity firm is an experienced operator in betting.

Reports emerged in November that it was a keen bidder for William Hill’s European unit after the company was sold to bookmaker Caesars Entertainment and in the same month, Apollo announced a deal to buy casino operator Great Canadian Gaming.

Interest by the global fund comes despite some questioning whether it would be a keen buyer, given the high level of scrutiny that comes with owning a wagering company.

It has weathered a storm from chief executive Leon Black’s ties to disgraced financier Jeffrey Epstein. Black has stepped down as chief executive, but plans to retain the role of chairman.

Should Apollo buy the business, it will be its first major Australian acquisition in about five years.

Entain, meanwhile, is said to be a highly motivated buyer.

The British company has been itself a target for US casino group MGM, and some say an acquisition of Tabcorp’s wagering and media division would be a highly effective defence strategy.

For the year to June, Tabcorp suffered a 19.5 per cent fall in its earnings for its wagering and media unit to $371m, while its gaming services EBITDA fell 42.5 per cent to $84m.