Tabcorp Lays Out Post-Demerger Plans after Court Approves Shareholder Vote

Posted on: April 1, 2022, 08:39h. 

Last updated on: April 1, 2022, 01:22h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Tabcorp is a step closer to separating its businesses after a court in New South Wales approved a shareholder vote on the matter earlier this week. Now, the gaming operator is laying its plans for how things may look once the demerger takes place.

Tabcorp
Tabcorp is closing in on its plans to separate its business arms. Shareholders still need to approve the arrangement, which they could do next month. (Image: Inside Asian Gaming)

The New South Wales (NSW) Supreme Court recently signed off on a request to allow Tabcorp shareholders to vote on the gaming operator’s demerger of its lottery and keno activity. The company first announced its plans last July, which potentially included the sale of its wagering business, arguing that it would create more value for shareholders.

Tabcorp can now move on to the next phase with the approval in place. It will retain its wagering operations, but is preparing for the upcoming shareholder vote. This means presenting all the details so that the company will be able to find support for its plans.

The lottery and keno activity can still provide a significant source of income for the right suitor. To demonstrate this, Tabcorp is laying out its plans ahead of a shareholder vote on May 12.

There will be two new companies as a result of the demerger. The first is The Lottery Corporation (TLC), and the second is the New Tabcorp.

Tabcorp previously received a lot of attention for its proposed demerger. Entain, Betmakers, and Apollo Global all submitted multibillion-dollar bids. However, interest waned when the company decided to hold onto its wagering operations.

TLC To Drive Innovation

TLC will continue to offer different gambling options, except for gaming services. This company will essentially follow in the footsteps of Tatts, which Tabcorp acquired in 2017.

It will “generate attractive returns for shareholders,” according to Tabcorp Chairman Steven Gregg. He adds that it has demonstrated its ability to serve the market through product innovation and game portfolio management.

This branch will target operations through five primary strategies – innovation, enhanced UX initiatives, increased penetration, retail growth, and new acquisitions.

Tabcorp’s recent AU$5.00 (US$3.75) share price and standard industry EBITDA (earnings before interest, taxes, depreciation and amortization) multiples give TLC a lot of potential. Advisory firm Grant Samuel recently asserted that its value could fall between AU$11 billion and AU$11.61 billion (US$8.24 billion and $8.7 billion).

Changes Coming in June

The other company will be New Tabcorp. This one may not ultimately be as valuable as TLC; however, it will take the lead in gaming growth. New Tabcorp will target UX, innovation, efficiency and sustainability. Company leaders expect to be able to greatly capitalize on any gaming reforms that arrive in Australia.

Grant Samuel forecasts New Tabcorp’s valuation at between AU$2.10 billion and AU$2.71 billion (US$1.57 billion and $2.03 billion).

The company believes it can have everything in place by June if should shareholders approve the demerger.