TAB chasing pack must clear regulatory hurdles

Suitors pursuing a break-up of Tabcorp Holdings’ wagering and media assets will have to clear a number of regulatory hurdles in order to complete a deal.

As further parties declare their interests in bidding to acquire TAB, the Australian Competition and Consumer Commission (ACCC) has stated that it is ‘monitoring developments closely’ in a situation that will likely change the landscape of Australian wagering.

ASX analysts have priced Tabcorp’s wagering unit at +AUS $3 billion (€1.9 bn). The winning bidder, however, will have to reassure the ACCC that any acquisition is in the interests of Australian racing, adheres to individual state wagering rules and honours TAB retail contracts.

Due to the complexities attached to a TAB takeover, the acquisition will not simply boil down to who wins the bidding war for Tabcorp’s underperforming asset.

Though no suitor has presented a formal bid to Tabcorp, ASX observers note a diverse cast of betting firms, private equity groups and business magnets circling TAB.

Reacting to news of a potential Tabcorp break-up, the Sydney Morning Herald (SMH) quoted outspoken Peter V’landys, Chief Executive of Racing New South Wales (Racing NSW), as stating that ‘racing would be the kingmaker of a TAB deal’.

He outlined that any approach for TAB would have to satisfy Racing NSW needs – a condition that would ‘not be taken lightly’ as Australian racing navigates its post-Covid future.

V’landys also warned interested parties that the racing sector would ‘not sit quietly’ and let its future TAB funding duties be negotiated behind closed doors.  

Further to satisfying racing duties, a successful bid will likely be required to renegotiate TAB retail network and totalisator terms across Australia’s six states, which maintain individual gambling laws.

Due diligence of a takeover would highlight Tabcorp’s post-merger difficulties in overhauling TAB’s retail systems across Australia, considered to be a complex undertaking for any suitor.

Meanwhile, TAB’s future will be weighed-up by a Tabcorp board led by new chairman Steven Gregg, who last November replaced Paula Dwyer who ended her 20-year tenure leading the ASX firm’s corporate governance duties.

Taking over responsibilities, Gregg leads Tabcorp’s global executive search for a new Chief Executive, as long-term incumbent David Attenborough will resign from duties this year.

Despite investor backlash in failing to deliver its post-Tatts merger growth, the Tabcorp board has previously stated that it holds no intentions of breaking up the company into separate units.

Regardless of TAB buyout interest, investor pressure has been placed on Gregg and the new Tabcorp board to present a fresh vision of the heritage gambling group in its post-Dwyer/Attenborough era.

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