The Battle for Tabcorp heats up as BetMakers Decides to Join in the Race

Tabcorp has suddenly become very popular in Australia, but not with gamblers. The company has fallen on hard times because of COVID-19 and Apollo Global Management and Entain had started a bidding war to try to convince it to sell its gaming assets. A third company has now joined as BetMakers Technology Group Ltd has submitted its own non-binding proposal. While this could be seen as a way for Tabcorp to quickly make a deal and move on, what is happening, instead, is that Tabcorp might now hold out for even more money.

BetMakers Enters the Tabcorp Race

Entain kicked things off when it submitted an unsolicited bid to purchase Tabcorp’s Wagering and Media division in February. It would ultimately put $2.7 billion (AUD$3.5 billion) on the table as Apollo Global came in with a $3.09 billion (AUD$4 billion) offer. Tabcorp executives maintained a solid poker face, though, not publicly showing any emotions or acceptance of either of the offers. BetMakers, which is an Australia-based company, has now matched Apollo’s offer, but the structure would be a little different.

BetMakers has reportedly proposed an acquisition composed of $773.1 million (AUD$1 billion) in cash and $2.32 billion (AUD$3 billion) in BetMakers shares. If the stock market movement that occurred is any indication, Tabcorp won’t be quick to react to the latest offer. BetMakers stock took a 17% hit after it announced its desire to battle for Tabcorp’s gaming assets. It is reported that BetMakers would have to take on new debt to cover the cash portion, which may have made its investors nervous. Additionally, Tabcorp’s gaming assets are said to be valued right at the $3.09-billion mark, which means there’s not a lot of upside for the company’s own investors.

Tabcorp Gains Self-confidence Over New Offer

The arrival of a third bid to purchase the company’s gaming assets has only given Tabcorp a jolt to its self-worth. With three companies interested in acquiring the assets, it shows that the company’s actual value is much higher than what is represented on paper. Credit Suisse has valued the company’s gaming assets at about the same amount as the latest offer, but Tabcorp can easily decide to wait to see if new offers will be presented. Additionally, it could determine not to sell its assets at all, something Tabcorp has said has been on the table from the start.

The BetMakers offer has caused mixed reactions, with one person commenting that the company is “a pretender trying to be a contender.” Gabriel Radzyminski of investment firm Sandon Capital added, “The question for Tabcorp shareholders is to ascertain and form a view about the value of BetMakers, which is not just about the share price. The reality is with a company at the stage of BetMakers’ development, that is a challenging assessment for Tabcorp shareholders to make.”