Entain Puts Pressure on Tabcorp to Make a Deal, but a New Wrinkle Emerges via FOX Bet

Should Tabcorp decide to spin off its gaming and lottery units into stand-alone companies, it’s going to fail. That’s the message Entain has sent to the company in an effort to convince Tabcorp decision-makers to accept its offer to acquire the units. Australia-based Tabcorp has had difficulty shoring up its gaming operations lately, which led to several companies approaching like sharks in the water. In addition to Entain, Apollo Global Management and BetMakers have submitted bids for the gaming assets, but Tabcorp could reject all of them and see if its gaming and lottery arms could survive on their own. Entain wants Tabcorp to think that this isn’t a possibility.

Sink or Swim for Tabcorp’s Gaming Operations

Entain approached Tabcorp about buying its gaming and media operations at the end of March before Apollo Global entered with its own offer. Tabcorp didn’t seem overly impressed with the offers that were on the table, despite as much as $3.09 billion (AUD$4 billion) being suggested. It told Entain that it would have to do a lot better if it wanted to be taken seriously, which Australia-based BetMakers saw as an opportunity to enter the hunt for the assets. However, Tabcorp repeatedly hinted at the possibility that it would reject all of the offers and list its gaming and lottery units as independent companies on the Australia Securities Exchange.

To take the latter option would be a bad move, according to Entain. It would result in a major loss of market share in addition to the ground Tabcorp has already given up. Dean Shannon, CEO for Entain Australia, asserted in public remarks yesterday, “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.”

Tabcorp Not Ready to Make a Move

BetMakers just joined the competition less than a week ago, which gave Tabcorp renewed enthusiasm that new offers might emerge. It has remained quiet on its future plans, other than to indicate that the proposals aren’t rich enough. It could be holding out to see if any new proposals come to the table, or it might already know what it wants to do and is enjoying all of the free media exposure it’s receiving.

Despite Entain’s attempts at convincing Tabcorp that a demerger of the assets would be the wrong option, some analysts believe it might be the smarter choice. Should the assets be sold to another company, gaming regulators across Australia would have to approve the arrangements before being finalized. For Entain to purchase them, because it is active in the country, competition regulators would have to approve them, as well.

There’s another twist that will keep this dance going a little longer. According to a report by the Brisbane Times, News Corp Australia is in “advanced talks” with a group that includes Matthew Tripp to bring FOX Bet to Australia. Tripp is the CEO of BetMakers and, although he isn’t directly involved in the FOX Bet negotiations, the sports gambling company would reportedly provide back-end systems to News Corp. Both News Corp. and Fox Corp., which is behind FOX Bet, are controlled by Rupert Murdoch.