Tabcorp to spin off its businesses

Tabcorp has received multiple offers for its wagering and media division.
Tabcorp has received multiple offers for its wagering and media division.

Tabcorp has announced it will spin-off its businesses into two separate companies, one covering its lottery operations and one comprising its wagering, media and gaming services.

Australia.- Lottery services provider Tabcorp has announced its intention to demerge its lotteries and Keno businesses to create two separate companies.

Tabcorp said the decision was taken following a strategic review of all relevant structural and ownership options to maximise value for shareholders. It will create two companies: Lotteries & KenoCo, which will cover lotteries and Keno, and Wagering & GamingCo, which will cover wagering, media and gaming Services.

Steven Gregg, Tabcorp chairman, said: “The two businesses are expected to be leaders in their respective markets, creating great experiences for millions of customers. 

“They will both build on their heritage of sharing the benefits of their commercial success with governments, the racing industry, licensed venues, newsagents and other retail and business partners.”

Tabcorp said the demerger will provide shareholders with the ability to value each business on a standalone basis, with a potential market re-rating of each.

As for the multiple offers Tabcorp has received for its wagering and media business, the company said it had engaged with all interested parties and concluded that the demerger was the optimal, and most certain, path to maximise the value of both businesses for Tabcorp shareholders.

According to the company, the demerger process is expected to incur between AU$225m to AU$275m in one-off separation costs and nearly around AU$40m to AU$45m in ongoing incremental costs.

The company noted that it will continue working with BetMakers to discuss potential commercial opportunities in international markets.

In May, BetMakers made an AU$4bn (US$3.09bn) offer through which Tabcorp would receive AU$1bn in cash and AU$3bn in BetMakers shares.

Entain, meanwhile, upped its original offer for Tabcorp from AU$3bn to AU$3.5bn. Apollo Global Management has put two offers on the table, one equalling the offer made by Entain and another offering US$3.10bn including Tabcorp’s gaming services business.

Tabcorp posts revenue of US$2.2bn for H1

The company reported AU$2.8bn (US$2.2bn) in revenue for H1 of its financial year, down 1.5 per cent year-on-year.

The primary source of revenue remained lotteries and keno, which saw a 1.6 per cent increase in revenue to AU$1.61bn (US$1.25bn). In this sector, EBITDA was up 12.8 per cent to AU$311m (US$241m).

Revenues in the wagering and media business increased by almost 1 per cent (US$922m) with digital revenue up 34 per cent due to Covid-19 retail closures and restrictions. EBITDA was AU$227m (US$176m), down 3.0 per year-on-year.

In the gaming services segment, revenues were down by 51.0 per cent to AU$73m (US$57m) and EBITDA fell 66.7 per cent to AU$22m (US$17m), mainly due to venues operating under social distancing restrictions.

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