Tabcorp Rebuffs $2.28 Billion Entain Bid, Promises Review of Betting, Media Units

Posted on: March 28, 2021, 09:33h. 

Last updated on: March 29, 2021, 11:18h.

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

Tabcorp turned back a $2.28 billion takeover offer from Entain Plc (OTC:GMVHY) for the company’s media and sports wagering businesses. But the Australian firm is promising a strategic review of those units that could ultimately lead to a sale or spin-off.

Tabcorp Entain
A Tabcorp betting shop in Australia. The company rejected a takeover bid from Entain. (Image: iTNews)

In a letter to the Australian Securities Exchange (ASX), Tabcorp confirmed it received multiple unsolicited offers for its betting and media arms, adding that while it carefully considered the proposals, the pitches “do not adequately value” the operations buyers are seeking.

Tabcorp has consequently decided to undertake a strategic review to assess and evaluate all structural and ownership options to maximize the value of Tabcorp’s businesses for the benefit of shareholders,” said the company in the note.

That review will be overseen by the Tabcorp board of directors and could include a sale of the aforementioned operations to a third party, a spin-off, or a possible separation of the company’s keno and lotteries arm. As part of the process, the gaming firm will also review options for its gaming services enterprise.

Entain Not Alone in Tabcorp Pursuit

British bookmaker Entain is far from the only party interested in Tabcorp’s media and sports betting business.

Last week, reports surfaced broadcast giant Fox Corp. (NASDAQ:FOXA) is considering a run at the Australian company as a way of bolstering its international sports wagering exposure. Tabcorp’s letter to the ASX didn’t specifically mention Fox.

Nor did it mention private equity firm Apollo Global Management (NYSE:APO). But that investor is rumored to be interested as well. In addition to its recent purchase of the Venetian and Sands Convention Center on the Las Vegas Strip and the acquisition of Great Canadian Gaming Company (GCGC), Apollo is rumored to be interested in William Hill’s international businesses, confirming its desire for gaming assets.

Fox makes for a credible Tabcorp suitor as well, given its ties to Australia and its desire to forge deeper into the sports betting arena.

Tough Luck for Entain

Just three months into 2021, and it’s already been active time for Entain on the mergers and acquisitions front. But the going hasn’t been smooth.

In addition to being turned away by Tabcorp, the company encountered some difficulty in a plan to buy Swedish gaming company Enlabs when Alta Fox Capital Management — a Texas-based hedge fund that owns 3.34 percent of the target’s shares outstanding equity — said Entain is undervaluing the firm.

The owner of the Coral brand, among others, was itself a target in January when MGM Resorts International (NYSE:MGM) — its partner on the BetMGM venture — made an $11.06 billion acquisition offer. Entain ultimately rejected that proposal, saying it undervalued the company.

It’s not yet clear if other suitors will emerge for Tabcorp. But it is obvious that the combination of media and sports betting under one umbrella is a compelling proposition for buyers.