Tabcorp Rejects Entain Plc Takeover Bid

Entain Plc has Tabcorp bid rejected

British gambling giant Entain Plc has suffered a setback in its bid for Tabcorp’s Wagering and Media division. Tabcorp firmly rejected the $3 billion offer from Entain Plc, the owners of the Ladbrokes brand.

Entain Plc hoped a $3 billion bid would be enough for Tabcorp to part company with its sought after Wagering and Media business. Tabcorp dashed those hopes and the hopes of anyone else wanting to get their hands on the said business.

The Tabcorp statement to the Australian Securities Exchange (ASX) did not directly mention Entain Plc in its statement to the Australian Securities Exchange (ASX).

“Tabcorp Holdings Limited has previously announced that it has received several unsolicited approaches and proposals in relation to a potential transaction involving Tabcorp’s Wagering & Media business. These proposals valued the Wagering & Media business at c. $3 billion.”

“The Tabcorp Board has carefully considered the proposals and formed the view that the proposals do not adequately value Tabcorp’s Wagering & Media business.”

“Tabcorp has consequently decided to undertake a strategic review to assess and evaluate all structural and ownership options to maximise the value of Tabcorp’s businesses for the benefit of shareholders.”

Entain Plc Gives Tabcorp Investors Food For Thought

Their $3 billion bid lies in tatters, but Entain Plc has not given up on the acquisition. A company spokesman issued a statement on behalf of the FTSE100 listed company.

“Entain Plc welcomes the announcement of Tabcorp’s strategic review and the opportunity it presents for investors to weigh up the certainty of its proposal to acquire Tabcorp’s wagering and media business against a demerger, which is simply the status quo option.”

“Entain is confident an acquisition of the business represents the most attractive pathway to value realisation for investors and that its business is a clear and obvious choice as a strong long-term partner for Australian racing.”

Busy Start to 2021 For British Firm’s Investment Arm

The company, formerly known as GVC Holdings, continued being active in the mergers and acquisitions department. Entain Plc was subject to a takeover bid from American outfit MGM Resorts.

MGM tested the waters with an opening bid of $14.49 billion for all of Entain’s shares. The move resulted in the company’s share price rocketing skywards. MGM’s opening bid was the only one it made after Entain Plc rejected it on the grounds of undervaluing the company.

The British company is purchasing Swedish online bookmaker Enlabs for $570.95 million. The move has not been without a hitch either. Texas-based hedge fund Alta Fox Capital Management holds 3.34% of Enlabs’ stack. It was unhappy with Entain’s offer, claiming it undervalues the company. This seems to be a common theme.

Company Weathers the COVID-19 Storm

Every gambling company has struggled during the ongoing COVID-19 pandemic. You only need to look at some of the Australian outfits, including Tabcorp, for evidence of that.

Entain Plc has managed to weather the storm thanks to its strong online presence. Net Gaming Revenue from its retail stores fell 40% to £857.1 million ($1.548 billion) due to enforced shop closures. It plans to permanently close 10% of its 3,000 Ladbrokes and Coral shops.

Digital sales soared 28% to £2.7 billion ($4.88 billion) as its online casino, sports betting, and poker products benefited from punters forced to remain home.

Business is booming in America, too, where its BetMGM partnership continues thriving. They opened in nine more states, including Colorado, Indiana, and Nevada, in 2020.

The company made £174.7 million ($315.63 million) profit in 2020 compared to a ($297.02 million) loss in 2019.

Shares in Entain Plc fell 2.9% on the back of the rejected bid news, despite all the other positivity. Those same shares recovered the majority of that loss and are trading close to a YTD all-time high.