Entain plc failed to convince Tabcorp to make a deal for Its TAB wagering division, rejecting the latest proposal. The chairman of the company said a A$3.5 billion (US$2.6 billion) offer was not “compelling enough.”
As well as calling for “more money on the table,” he called for interested parties to “take on risk on getting stakeholder approvals.”
Meantime, the Australian company plans a demerger of its lotteries and keno business, according to Asia Gaming Brief.
“Following a thorough and rigorous assessment of all relevant structural and ownership options, the Tabcorp Board of Directors has concluded that a demerger is the optimal and most certain path to maximize value for Tabcorp shareholders,” said chairman Steven Gregg.
The Lotteries & Keno division become a separate ASX-listed entity, with the Wagering & Media and Gaming Services divisions to remain under the existing listed Tabcorp entity. Tabcorp shareholders would retain their existing shares as well as being given proportionate shares in the new Lotteries & Keno company, according to Inside Asian Gaming.
The spin-off and separation of lotteries and keno divisions make for an independent operation to “trade at market values which reflect their individual characteristics,” as well as provide focused management and other advantages.
The demerger will also give Wagering & Media an upside as a result of future regulatory reform and expansion on the international front.
Adding to this are the problems associated with the proposed sale of the wagering division, including complex legislative, regulatory, competitive, and other third-party approvals.
“The process for, and likelihood of, obtaining these approvals is uncertain and expected to take an extended period of time,” the company said in a statement July 5. Still, Tabcorp remains “open to future engagement with bidders on revised proposals that deliver sufficient value and certainty for Tabcorp shareholders”.
Entain was not too happy with the decision, according to the Racing Post.
“We believe our all-cash offer would have delivered superior outcomes for shareholders, customers, employees and the wider industry,” the company said in a statement.
Analyst David Brohan of Goodbody said it remained to be seen whether Entain would come back with a new offer that would appeal to Tabcorp.
Entain could go after William Hill’s European assets, according to the Daily Telegraph. But Apollo Global Management may be the leading contender.
