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Apollo Woos Tabcorp with A$4bn Offer for Wagering, Poker Machine Arms

A new bidder has emerged for Australian gambling firm Tabcorp’s wagering and media business and it should be noted that that one has been on a bit of a shopping spree for gambling assets in the past year.

US private equity outfit Apollo Global Management has tabled a A$3.5 billion offer for Tabcorp’s betting and media operations to match an earlier offer from UK gambling firm Entain.

Tabcorp confirmed Apollo as a suitor on Thursday afternoon. The Australian company said that the New York-based buyout firm has made a separate, A$4 billion offer, that also includes Tabcorp’s poker machine business.

The A$11 billion gambling operator created from the 2017 merger of Tabcorp and Queensland-based company Tatts Group said that its board is yet to form a view on the merits of Apollo’s second offer and that the proposal is conditional on due diligence, finance, regulatory approval and approval from Tabcorp’s racing industry partners in multiple Australian states and territories.

The company further noted in a statement that it will assess the offer in the context of its previously announced strategic review.

Back in February, Entain, which operates the Ladbrokes and Neds brands in the Australian gambling market, made a A$3 billion offer for Tabcorp’s TAB and media unit. In March, the Australian company rejected that and a slew of other bids, which prompted Entain to sweeten its offer to A$3.5 billion.

Interest from Multiple Suitors Prompts Strategic Review

Aside from Entain and now Apollo, Murdoch family-owned Fox Corporation in partnership with Aussie online sports betting veteran Matthew Tripp are believed to have too been interested in buying Tabcorp’s wagering and media operations.

This has prompted the Australian company’s board to launch a strategic review into whether it should sell its wagering and media business or demerge the unit from its lottery operations and list it as a separate entity on the ASX.

The continued underperformance of Tabcorp’s wagering business has agitated investors and the strong performance of its lottery operations has led to some of them pushing for a split of the Tabcorp-Tatts merger.

Tabcorp’s poker machine business is relatively small when compared to the lotteries arm, which means that it could probably be combined with the wagering unit in the case of a demerger. This could mean that Apollo’s A$4 billion offer that also includes the pokies business could gain much more traction with the company’s board than other bids.

The US buyout giant is also believed to be the frontrunner to buy William Hill’s non-US business as the British bookmaker’s new owner, Caesars Entertainment, Inc., has said that it would offload that unit and that it would only focus on its US operations.

Source: Apollo makes $4b bid for Tabcorp’s wagering, media and pokies assets, The Sydney Morning Herald, May 6, 2021

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