Ladbrokes studies form for possible punt on Tabcorp

Sources say the London-based company, Ladbrokes Coral, has reached out to advisers for assistance in sizing up Tabcorp for a potential acquisition of its lotteries business or wagering business, or both.

British betting company Ladbrokes is understood to have been running the ruler over Tabcorp in the past year, in addition to other private equity funds.

Sources say the London-based company, Ladbrokes Coral, had reached out to advisers for assistance in sizing up Tabcorp for a potential acquisition of its lotteries business or wagering business, or both.

While some sources say that the lotteries arm is the focus for the British bookmaker, others say it has been closely scrutinising its wagering division.

Buying the wagering business would add 30 per cent to Ladbrokes’ market share, say analysts.

 

However, it is understood from sources close to Ladbrokes that the British bookmaker has not progressed any discussions with Tabcorp and is not working on any transaction.

The Australian reported on Friday that big private equity firms were circling Tabcorp and were poised to make a bid for the embattled wagering company in a deal that would see digital betting pioneer Matthew Tripp emerge as the boss of the TAB wagering arm.

DataRoom also understands that US investment bank Goldman Sachs has been working with a Hong Kong-based group with an interest in Tabcorp in recent months.

The Australian reported that Mr Tripp was understood to have been approached by two private equity consortiums in recent weeks, with one party eager to bid for the entire Tabcorp business in a deal that may be worth $9bn.

The other group is interested in only the TAB wagering business, potentially valuing the unit at up to $3bn. A bid could emerge before Christmas.

Major private equity firms that have a history in investing in gambling companies include TPG Capital and others such as CVC Capital Partners and Permira.

Another potential investor could be BGH Capital, run by former TPG Capital executives Ben Gray and Simon Harle.

 

A KKR-backed group, the Pacific Consortium, which included Macquarie Group, Aware Super and Morgan Stanley Infrastructure Partners, made an unsuccessful $6bn bid for Tatts Group before the lotteries outfit merged with Tabcorp four years ago.

There is talk in the market that Macquarie is working on a major transaction in the M&A space.

It comes as some investors are believed to have been lobbying behind the scenes for a demerger of Tabcorp’s lotteries business following disappointment about the company’s performance since it led an $11bn merger with Tatts in 2017.

The hope was that Tabcorp’s management could boost the performance of the Tatts wagering business, but the turnaround and integration of the business has taken longer than most had anticipated.

Some fund managers take the view that lotteries — considered the jewel in the crown — should be split from wagering as part of a demerger, but the dilemma would be where to put the Tabcorp gaming operations.

Tabcorp recorded an $870m statutory loss for 2020 and is not paying a dividend.

It raised $600m through an entitlement offer to pay down debt and strengthen its balance sheet amid the pandemic.