UK giant Entain warns Tabcorp to take its money or risk falling behind
The local boss of UK wagering giant Entain has warned Tabcorp that a standalone TAB business could be worth far less than the cash offers on the table by the time a demerger is completed.
The $11 billion Tabcorp is weighing up three offers for its betting business – cash bids of $3.5 billion from Entain and private equity group Apollo, and a $4 billion cash-and-scrip offer revealed on Friday from the Matthew Tripp-backed betting technology group BetMakers – against the option of splitting its betting and lotteries division into two separate ASX-listed companies.
The local boss of Ladbrokes’ owner Entain says its offer gave Tabcorp shareholders certainty.Credit:Getty Images
Speaking publicly about its bid for the first time on Monday, Entain Australia’s chief executive Dean Shannon said Tabcorp should accept its $3.5 billion bid for the TAB bookmaking and media business or risk losing more ground to online competitors if it opts for a demerger.
“That’s going to take some time to play out, Tabcorp is losing market share – what’s it going to be worth by the time we get to a demerger?” said Mr Shannon, who runs the Ladbrokes and Neds betting brands locally.
“Our offer gives Tabcorp shareholders certainly. We’re in this position where we could possibly buy Tabcorp wagering and media because the shareholders are sick of listening to promises and not having them delivered.”
Several major investors and analysts believe a demerger is the most likely outcome because state racing bodies – and in Entain’s case the competition regulator – will need to sign off on a sale to another party.
But Mr Shannon said he was confident a sale could be finalised just as quickly as a spin-off, in less than 12 months. He said the £9.7 billion ($17.8 billion) London-listed Entain was best placed to invest in the local racing industry, which gets the bulk of its funding through partnerships with TAB.
“They all know how supportive I’ve been of racing for the last eight or nine years,” he said.
In a further shake-up to the betting industry, The Age and Sydney Morning Herald revealed on Monday that News Corp Australia was in advanced talks with a consortium linked to Mr Tripp to launch Lachlan Murdoch’s Fox Bet wagering outfit locally.
Mr Shannon said Ladbrokes would treat Fox Bet just like any other competitor, and that this week’s revelation “asks more questions than it answers” owing to Mr Tripp’s simultaneous involvement in the Fox Bet launch and BetMaker’s TAB bid.
“Which camp’s Matthew in and how’s that going to work for Tabcorp shareholders?” he said.
Improving TAB’s back-end technology would be a major focus of turning the business around under Entain, Mr Shannon said, and it could make more from its monopoly retail presence in about 4000 pubs, clubs and shopfronts. Entain owns thousands of retail betting shops across the UK and Ireland.
“They’ve dropped the ball over the years,” he said. “I don’t necessarily think they’ve marketed their products well and I don’t think that they’ve kept up the product to what the customer is looking for.”
Mr Shannon said he doubted the racing industry would back Apollo’s bid, given the private equity group would try to maximise short-term profits and sell it again in a few years. BetMakers, meanwhile, was not a complete technology fix for TAB and was more interested in media and distribution rights for its US business, he said.
BetMakers’ shares continued to tank on Monday, closing 13 per cent lower at $1.16. That brings its losses since it announced its TAB bid on Friday morning to 27 per cent.
Tabcorp’s shares, which have risen around 30 per cent this year on anticipation of a transaction, closed 1.35 per cent lower at $5.10. Tabcorp expects to complete its strategic review of its wagering division near the end of June.
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