Entain PLC made a non-binding offer to the betting and media division of Australia’s largest online gambling company, Tabcorp Holdings Ltd.
Entain is possibly aiming to combine its current Australian business with Tabcorp Holding, but those discussions are in an early stage, according to company representatives.
Tabcorp said that Entain’s offer will have competition since in recent weeks the Australian company reported having received “a series of unsolicited proposals and approaches.”
The deal is important to the owner of London-listed betting chain Ladbrokes, as it will strengthen the company’s positions in the region.
Tabcorp’s largest division
The largest division of the Australian company is Wagering & Media after the Lotteries & Keno business. In the summer of 2020, Tabcorp won At $ 5.22 billion ($ 3.98 billion) from Wagering & Media, which is 40% of the company’s revenue.
Goodbody analyst David Brohan said in a note to clients: “Given the established nature of the Australian market, there are few such opportunities left to explore.”
He added: “Assuming any deal is completed at the correct price, we can see the positives of a transaction.”
Entain made a statement in response to speculation of a future merger with Tabcorp Holdings. It confirmed that it had made an offer to the Australian company to acquire its Wagering & Media business.
According to the statement, the discussions are in a early stage, so nothing can be confirmed at this time, but the British company said the potential deal would be in line with its current M&A strategy of expanding into the regulated international markets.
If the merger is successful, Tabcorp would be part of Entain’s existing Australian business to create a multi-brand betting company, leader, integrated and multichannel.
After the news broke, Tabcorp’s shares rose 9% at Sydney operations on Tuesday, valuing the company at A $ 9.9 billion.
In November last year, the Australian company had to face a significant fine for violating New South Wales’ online gambling law. The loss was significant and the benefits from the future Entain deal will make up for that.
Meanwhile, Entain turned down an $ 11 billion offer from MGM Resort. The gambling house’s explanations were that the offer significantly undervalued the company.
Even after MGM decided to include both cash and shares in its offering, Entain refused.
After several attempts to acquire the British brand, MGM announced last month that it is no longer interested in the future merger that would supposedly benefit both companies.
Source: “Entain In Talks To Buy Australia’s Tabcorp Gambling Business”, Bloomberg, February 2, 2021