Entain Ready to Blow Competition for TAB, Mulling AU$4B+ Bid

UK-based gambling group Entain is mulling a new enhanced offer for Tabcorp’s media and sports betting assets to blow out competitors and acquire the business, several media in Australia report.

TAB Bidding Impasse

Having seen its opening bid for the Australian sports betting business of AU$3 billion ($2.3 billion) rejected in February, Entain followed with an improved proposal to AU$3.5 billion ($2.7 billion) in April, and now it is said the group is ready to go with a substantially bigger than AU$4 billion ($3.08 billion) bid and blow competitors out of the water.

Entain’s AU$3.5 billion all-cash offer was matched by private equity firm Apollo Global Management which joined the race for the sports betting business of the Australian operator, having failed to acquire UK-based bookmaker William Hill.

Surprisingly, both candidates were outbid by BetMakers. After the consultation by prominent Australian bookmaker expert, Matt Tripp the technology company placed a cash and stock bid of AU$4 billion in an attempt to launch a new all-Australian wagering and racing enterprise.

Another option Tabcorp is willing to explore is to reject all offers on the table as it considers them falling short of the valuation for its media and wagering units and list its media and sports wagering businesses as independent companies on the Australia Securities Exchange (ASX).

Assuming High Risk Justified

According to the latest reports in the country, Entain is ready to embark on a high-risk strategy and substantially outbid the other candidates, as the purchase will have an immediate impact on its position in the market.

A successful bid for TAB will make Entain the biggest gambling and wagering operator in Australia, allowing it to expand its Ladbrokes Australia and Sportingbet online gaming brands with TAB’s retail footprint and digital portfolio.

Besides, Entain believes it is the only candidate capable of meeting the requirements related to the country’s wider interest in gambling contingent on TAB’s sale and thus clearing the Australian Competition and Consumer Commission (ACCC) probe.

The obligation to ensure funding for Australian horse racing is deemed as a critical factor for any potential suitor of TAB, after a statement by Racing New South Wales outlined a commitment to funding guarantees from bidding parties will be required.

Entain is about to release interim results report on July 8, and the other TAB candidates will be closely monitoring to see whether the much-improved bid will materialize.

Tabcorp shareholders will also keep an eye on the report, still feeling the pain from the AU$11 billion ($8.47 billion) merger deal with Tatts Group, which took two years to complete and is still to deliver the proposed value to investors.