Published: May 6, 2021

Apollo makes $4b bid for Tabcorp’s wagering, media and pokies assets

The race for Tabcorp’s wagering and media business is heating up with private equity outfit Apollo Global Management matching UK bookmaker Entain’s $3.5 billion bid for the struggling business.

Confirming Apollo as a suitor for the first time, Tabcorp said on Thursday afternoon that the New York-headquartered outfit had also put forward a second offer, valued at $4 billion, that would see it take control of Tabcorp’s poker machine servicing business as well.

Apollo has made a $4 billion bid for Tabcorp’s wagering, media and pokies assets. CREDIT:GETTY

The $11 billion listed gambling giant said Apollo’s second offer was conditional on due diligence, finance, approval from regulators and Tabcorp’s racing industry partners.

“The Tabcorp board has not yet formed a view on the merits of the revised proposal and will assess it
in the context of the previously announced strategic review,” it said in a statement released just before 5pm.

Entain, which owns online bookmakers Ladbrokes and Neds in Australia, made a $3 billion offer for Tabcorp’s TAB wagering arm in February which, after being knocked back, it increased to $3.5 billion last week.

Interest from multiple parties prompted Tabcorp’s Steven Gregg-led board to launch a strategic review looking at whether it should try to sell its unloved wagering and media business, or demerge the unit from its lotteries arm and list it as a separate company on the ASX.

Investors have become increasingly frustrated with Tabcorp over the performance of the wagering unit, as it lost ground to online rivals including Sportsbet and Ladbrokes. Meanwhile, strong returns from it lotteries business has led to some investors pushing for a break-up of the $11 billion merger between Tabcorp and Tatts in 2017.

Entain has not expressed any interest in Tabcorp’s pokies servicing business so far. But the relatively small unit may sit more logically with wagering in a demerger situation, meaning Apollo’s secondary $4 billion offer for the wagering and the pokies businesses may gain more traction with Tabcorp’s board.

Media mogul Lachlan Murdoch has also expressed interest in Tabcorp’s wagering and media assets as his Fox Corporation looks to grow on the success of its Fox Bet operation in the US, while Australia’s online wagering pioneer Matthew Tripp has also positioned himself to be involved in a deal.

A major complication in any sale going ahead is the new owner being able to renegotiate agreements Tabcorp has with state racing bodies, which get most of their funding through licences they issue to TAB.

Mr Gregg, Tabcorp’s chairman, said earlier this year that the certainty of any deal passing regulatory muster would be just as important in determining the future of the business as the size of the bids it receives.

Tabcorp’s shares have risen steadily on the likelihood of a demerger or sale, increasing 28 per cent since January 1. They closed 0.2 per cent higher at $5.01 on Thursday.,to%20%243.5%20billion%20last%20week.&text=Entain%20has%20not%20expressed%20any,pokies%20servicing%20business%20so%20far.

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