Entain in talks with Tabcorp over wagering division buyout
Ladbrokes and Neds owner confirms non-binding offer in deal that could lead to ten-fold increase in Australian market share
Entain has made a non-binding indicative offer to acquire Tabcorp’s wagering and media business in Australia.
The FTSE 100 operator would become the biggest sports betting operator in Australia were it to agree a deal, although there is plenty still to be negotiated, according to the firm.
“Whilst discussions are at an early stage, any transaction would be in line with Entain’s current M&A strategy of expanding across regulated international markets,” Entain told the London Stock Exchange.
“As such, this would present an opportunity to acquire an attractive business which, if combined with Entain’s existing Australian business, would create a leading, integrated multi-channel and multi-brand wagering company,” it added, responding to speculation in the Australian Financial Review.
Entain is currently live in Australia with its Ladbrokes and Neds brands and is understood to hold nearly 4% of the country’s sports betting and horseracing market according to IBISWorld, although Barclays estimated the figure at closer to 13% in H1 2019.
Tabcorp, which is Australia’s largest gambling company, has a market share closer to 44%, according to IBISWorld.
Despite its scale, Tabcorp’s wagering arm is considered non-core as the business focuses primarily on lottery and keno gaming. Tabcorp’s betting division makes close to A$400m a year in earnings.
Earlier this week, Tabcorp confirmed it had received a number of proposals regarding the sale of its wagering and media business, concluding there was no certainty that any transaction would occur.
“The proposals were expressed to be confidential, indicative, non-binding and subject to numerous conditions including due diligence, financing and various regulatory approvals,” said Tabcorp.
Tabcorp is widely considered to be underperforming considering its scale in Australia and is reportedly under pressure from key shareholders to divest the wagering business.
Tabcorp’s share price increased by 8.8% today on the Australian Securities Exchange.
EGR understands Entain could face competition from private equity firms for Tabcorp’s betting arm.