Tabcorp to spin-off Lotteries and Wagering operations

The Australian gambling giant Tabcorp has announced plans to spin off its Lotteries and Keno and Wagering and Media operations after conducting a strategic review of its business.

This comes after the operator received several offers to acquire its wagering and media operations from several gambling businesses.

Tabcorp to spin-off Lotteries and Wagering divisions

In March, Tabcorp launched a strategic review to look at the structural and ownership options available to the business in an attempt to create more value for investors. This also included possibly selling off its Wagering and Media divisions.

When the review was announced, Tabcorp revealed it had received several unsolicited proposals to acquire the division but according to the operator none of these represented the true value of the operation.

According to the announcement, Tabcorp will spin off its divisions to create two separate entities; Lotteries and KenoCo, which will oversee Tabcorp’s lottery operation in Australia, and Wagering and GamingCo, which will cover all wagering, media, and gaming operations.

Tabcorp explained the move would allow shareholders to value each of the businesses on an individual basis and enable the Wagering and GamingCo entity to pursue international expansion opportunities.

Tabcorp said both businesses would have strong balance sheets and benefit from focused management and optimised capital structures, a more focused operating profile, access to new investors, and the chance to participate in future merger and acquisition activities.

Tabcorp chairman Steven Gregg and the operator’s current board of directors will oversee the demerger. Meanwhile, David Attenborough will stay on as managing director and CEO until the demerger is complete.

According to preliminary estimates, the demerger process could come with a one-off separation cost of between AU$225m (£122.3m/US$169.3m) and $275m, as well as $40m to $45m in ongoing costs.

Gregg said: “The foundations have been laid for Lotteries and KenoCo and Wagering and GamingCo to deliver long-term growth. The Tabcorp and Tatts integrations has set up both businesses to benefit from enhanced scale and diversification.

“The two businesses are expected to be leaders in their respective markets, creating great experiences for millions of customers. They will both build on their heritage and sharing the benefits of their commercial success with governments, the racing industry, licensed venues, newsagents and other retail and business partners.”

Tabcorp blows the whistle on bidding war

The decision means that Tabcorp will now hold onto its Wagering and Media divisions, effectively bringing the bidding war to a close.

Several firms including Entain, Apollo Global Management, and BetMakers Technology Group made offers to acquire the operation.

Entain made an offer valuing the Wagering and Media arm at $3.05bn while Appollo offered $4bn to acquire the Wagering and Media division as well as Tabcorp’s gaming services segment.

Meanwhile, BetMakers made a $4bn proposal for the Wagering and Media operation.

The Australian operator explained it had spoken with the interested parties but decided the demerger was the “optimal and most certain” path to improve value for investors.

However, Tabcorp said it would remain open to future engagement on any proposal that could provide shareholders with “sufficient value and certainty.”

In regard to BetMakers, Tabcorp said it would continue discussions with the supplier on commercial opportunities in international markets. BetMakers chief executive Todd Buckingham welcomed the decision

Buckingham said: “Having received clarity from Tabcorp regarding the planned director of its Wagering and Media business, BetMakers will continue discussions with Tabcorp regarding international opportunities, and we believe these opportunities have the potential to be significant.

“BetMakers remains firmly of the view that the company’s opportunities in regulated wagering jurisdictions, and in particular Australia and the US, are a clear priority and we will continue to explore all opportunities that can accelerate or capitalise on this foundation.”