Entain Ups Tabcorp Takeover Offer to $2.7B, Eyes Dominant Australia Perch

Posted on: April 27, 2021, 09:11h. 

Last updated on: July 5, 2021, 01:20h.

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

Entain Plc (OTC:GMVHY) is making another run at Tabcorp’s betting and media businesses, raising its acquisition bid to $2.7 billion from $2.28 billion.

Entain Tabcorp
A Ladbrokes betting shop in the UK. Owner Entain increased its takeover bid for Tabcorp. (Image: The Guardian)

Both companies confirm the revised proposal. The new offer from UK-based Entain arrives about a month after the Australian target rejected the initial $2.28 billion overture, calling it inadequate. Tabcorp isn’t saying much about the new bid, aside from that it’s being evaluated.

“The revised proposal continues to be subject to numerous conditions, including due diligence, arranging financing, receipt of all relevant regulatory approvals, and obtaining various third party approvals and consents,” said the Australian gaming operator.

The Tabcorp Board has not yet formed a view on the merits of the revised proposal and will assess it in the context of the previously announced strategic review.”

Following Entain’s original takeover proposal, Tabcorp promised a strategic review of its media and wagering units, stating that the process could result in a sale to a third party, a spin-off, or divestment of its keno and lottery units.

Aussie Allure Makes Tabcorp Attractive Target

In the investment community these days, the sports betting thesis largely revolves around the US — a fast-growing market that isn’t yet as mature as Australia or the UK.

That doesn’t diminish the allure of Tabcorp for Entain, or any suitor, for that matter. But the Aussie company is a particularly compelling target for the Ladbrokes owner. The British company has a four percent share in Australia’s horse racing and sports betting segment. But Tabcorp has nearly 11 times that at 43.7 percent, meaning a combined entity would control nearly half the market.

“The proposed transaction would be in line with Entain’s current M&A strategy, and presents an opportunity to acquire an attractive business, which, when combined with Entain’s existing Australian business, would create a leading, integrated multi-channel and multi-brand wagering company,” according to the British operator.

Australia is also home to devoted bettors. Aussies between the ages of 18 to 49 spend almost $775 a month on sports bets — good for one of the highest clips in the developed economies — according to the Australian Gambling Research Center. In 2018, nearly $24 billion was spent there on horse racing and sports wagering.

Entain Could Have Company

Entain isn’t the only suitor for Tabcorp. The target previously disclosed to the Australian Securities Exchange (ASX) that it received multiple offers.

While only the Coral owner is openly confirming a bid, Rupert Murdoch’s Fox Corp. (NASDAQ:FOXA) is rumored to be considering a run at Tabcorp, too. The media giant is actively looking for avenues to bolster its sports wagering exposure in the US and other countries. There’s also speculation private equity firm Apollo Global Management (NYSE:APO) could join the Tabcorp bidding process.

Some analysts see Entain as a possible takeover target, noting that MGM Resorts International (NYSE:MGM) — its partner on the BetMGM unit — could revisit an acquisition offer that was turned back earlier this year.