Suitors looking to split Tabcorp

SHAREHOLDER calls for the split of Tabcorp’s lottery business from its wagering arm look set to be heeded, after the gambling giant confirmed it had received “a number” of approaches to carve up its $9bn gambling empire.

Tabcorp confirmed contact from suitors on Tuesday.

British-listed gambling giant Entain, which owns the Ladbrokes brand in Australia, is understood to be actively courting Tabcorp about taking over its wagering division.

Meanwhile big private equity firms have been circling Tabcorp, with two consortiums keen to strike a deal that would see renowned digital betting pioneer Matthew Tripp head the company.

Shareholders have backed a break-up, believing significant value could be unlocked by having Tabcorp’s lotteries business operating on its own.

Tanarra Capital, the Melbourne investment house headed by John Wylie and a major Tabcorp shareholder, said a lotteries-focused Tabcorp would be re-rated by the market as an infrastructure style stock with regular and safe income growing annually that could see it trading at 17-25.5 times EBITDA.

“We think it is worth at least $5 per share, before any control premium,” Tanarra portfolio manager Vidhur Rangaswamy said. “A separation of Lotteries and Wagering liberates each business to pursue its own growth strategy and best deliver shareholder value over the long-term.”

Tabcorp closed up 8.8 per cent to $4.46 on Tuesday — almost a 12-month high.

The company has been losing market share in its wagering business to digital-focused rivals such as Sportsbet and Ladbrokes, and is also in a state of flux, hunting for a new chief executive after long-serving boss David Attenborough and chair Paul Dwyer announced their joint departures last July.

After initially hosing down takeover speculation, Mr Attenborough on Tuesday confirmed the company had received unsolicited proposals.

“Tabcorp confirms that it has received a number of unsolicited approaches and proposals in relation to a potential transaction,” he said.

“The proposals were expressed to be confidential, indicative, non-binding and subject to numerous conditions including due diligence, financing and various regulatory approvals.

“There is no certainty that any transaction will occur.”

One party is said to be eager to bid for the entire Tabcorp business in a deal that may be worth $9bn.

The other group was interested in only the TAB wagering business, potentially valuing the unit at up to $3bn.