• Australian gambling giant Tabcorp will conduct a strategic review of its holdings after rebuffing $3 billion offers for its wagering and media arm.
• Tabcorp’s wagering sector has reportedly drawn significant interest from outside parties looking to capitalise on Australia’s gambling habit.
• Tabcorp will “assess and evaluate all structural and ownership options” before making any decision to sell or demerge.
• Visit Business Insider Australia’s homepage for more stories.

Australian gambling giant Tabcorp has announced a strategic review of its holdings, after it found unsolicited offers for its wagering and media arm, which reportedly promised the company around $3 billion, “do not adequately value” Tabcorp’s assets.

In a Monday statement released to the ASX, Tabcorp said its board has “carefully considered” the proposals, but will instead conduct a review to “assess and evaluate all structural and ownership options to maximise the value of Tabcorp’s businesses for the benefit of shareholders.”

The review could see the wagering and media arm sold to a third party, or demerge from Tabcorp’s booming lotteries and Keno holdings, the company said.

The announcement comes amid growing outside interest in the bookmaking side of the business, which faces stiff domestic competition in the form of Sportsbet and Ladbrokes.

UK firm Entain, which owns Ladbrokes, is reportedly one of the firms to have offered $3 billion for Tabcorp’s relevant bookmaking wing, while US private equity fund Apollo is understood to be another interested party.

Separately, the Sydney Morning Herald reports Fox Corporation, led by Lachlan Murdoch, may be eyeing Tabcorp’s wagering wing as a potential avenue to enter Australia’s lucrative sports betting market.

News of the strategic review follows mixed financial results for the six months to December 31, 2020, which saw Tabcorp’s lotteries and Keno division grow its digital presence and scratch-off sales, as COVID-19 restrictions and retail site closures hampered its wagering division.

The lotteries and Keno division booked a 5.4% EBITDA growth from the first half of the 2020 financial year, with the division racking up $311 million. Meanwhile, the wagering and media section shed 3% of its EBITDA over the same time period, winding up with $227 million.

Monday’s statement gives credence to the opinion that any sale or demerger of Tabcorp’s wagering and media division could allow the flourishing lotteries sector to build shareholder value, without being beholden to racing and other sports betting concerns.

But even if the lotteries wing appears to be Tabcorp’s big winner, the decision to rebuff $3 billion offers for its wagering interests suggests Tabcorp won’t look to offload its betting sector for cheap.

“Our clear objective is to ensure that we fully maximise the value of Tabcorp’s gambling entertainment businesses for our shareholders,” said Tabcorp chairman Steven Gregg.

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