Entain Could Again Raise Offer for Tabcorp Media, Sports Betting Units

Posted on: June 26, 2021, 12:18h. 

Last updated on: June 26, 2021, 08:07h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Rumors are swirling that Entain Plc (OTC:GMVHY) could again increase its bid for Tabcorp’s media and sports wagering businesses as competition for those assets intensifies.

entain tabcorp
A bettor at a Tabcorp shop in Australia. Rumors indicate Entain could raise its offer for the company’s media and sports betting units. (Image: Yahoo Sports Australia)

The UK-based bookmaker is competing with private equity shop Apollo Global Management (NYSE:APO) and BetMakers for the Tabcorp units. There’s speculation that News Corp Australia could get into the mix as well.

Tabcorp’s board met earlier this week to discuss plans for the media and sports betting businesses and the offers it received. But no official announcement emerged from that conference. That’s not stopping the rumor mill from spinning about Entain possibly upping its offer a second time.

Speculation is mounting that Entain could come back with a higher offer for Tabcorp’s wagering and media unit as its share price soars on the London Stock Exchange,” reports The Australian.

Entain stock is on a torrid pace this year. It’s one of the best-performing consumer discretionary names in the UK, while its US-listed equity is up almost 59 percent year-to-date and 8.57 percent over the past month.

Entain Current Offer Still Strong

In March, Entain offered $2.28 billion for the Tabcorp businesses prior to boosting that bid to $2.7 billion a month later.

Barely more than a week later, Apollo jumped into the fray, offering $3.1 billion to three Tabcorp units: gaming services, media, and sports wagering. However, the gaming services business wasn’t part of the initial strategic review undertaken by the Australian company. If it’s removed from the equation, the private equity company’s offer — at least for now — matches Entain’s.

More recently, Australian betting technology company BetMakers joined the party, offering $3.1 billion in cash and equity for Tabcorp’s media and sports betting arms.

Despite all the hoopla, analysts almost universally view Entain’s current offer as superior, because it’s an established operator in Australia — something Apollo is not — and it’s all cash, whereas the BetMakers bid would make Tabcorp shareholders investors in a new enterprise. It’s rumored Tabcorp investors simply want to be rid of the lagging businesses, potentially rendering the Betmakers proposal unattractive.

Next Moves for Entain

Entain recently publicly urged Tabcorp to accept its offer, noting that it’s committed to the businesses, whereas Apollo may simply be looking to flip them for a profit at a later date.

Should Entain opt to boost its offer, it’s not immediately clear what form that increase would take. It could leverage its high-flying stock and include some in a new, higher bid, though that may not be to the liking of Tabcorp investors. The suitor could also sell debt or equity to raise more cash and add some of the proceeds to a revised pitch for the Tabcorp assets.

For now, those are just ideas. But what is clear is that if Entain is ultimately successful in procuring Tabcorp’s media and sports wagering assets, an Australian sports betting juggernaut — one with almost half the country’s sports wagering market share — will be created.