Tabcorp confirms proposal for break-up with wagering, media business split

Tabcorp’s board has fielded a new a new proposal that would split the company’s wagering and lotteries divisions. Picture: Joe Castro

Australian betting giant Tabcorp has confirmed to the market that it has received approaches in relation to a potential transaction involving its wagering and media business.

In a statement, Tabcorp said: “Tabcorp confirms that it has received a number of unsolicited approaches and proposals in relation to a potential transaction involving Tabcorp’s Wagering and Media business”.

Tabcorp said that the proposals were expressed to be confidential, indicative, non-binding and subject to numerous conditions, including due diligence, financing and various regulatory approvals.

The company said that its board is assessing the proposals and Tabcorp would update the market in due course.

It comes after DataRoom revealed on Tuesday that Tabcorp was understood to have received a proposal to break up the $9 billion betting company.

The proposal was received by the board in the past two weeks, say sources.

It is understood that the plan involves a demerger of the lotteries arm and returning the business back to shareholders with some cash, while taking ownership of the wagering division.

Shares in Tabcorp have rallied more than 6 per cent in Tuesday’s trading session since DataRoom broke the news.

On Tuesday, industry sources were pointing to wagering giant Ladbrokes as the party that had potentially made the approach.

However, the British bookmaker declined to comment on whether it was the suitor.

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

British betting company Ladbrokes has been running the ruler over Tabcorp in the past 18 months, as reported by DataRoom in November.

This was after The Australian reported the same month 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.

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

The other group was interested in only the TAB wagering business, potentially valuing the unit at up to $3bn.

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.

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.

DataRoom also understands that US investment bank Goldman Sachs had been working with a Hong Kong-based group with an interest in Tabcorp last year, with some questioning whether this could be the Hong Kong Jockey Club.

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.