Entain has put forward a revised offer to buy out Tabcorp’s sports gambling business with $3.5 billion now the best option available on the table.

Bids for Tabcorp Are Still Unsatisfactory

The gentlemanly bidding war for Tabcorp’s media and sports betting operations in Australia counties as Entain may have fallen short with its renewed $3.5 billion* bid, still not reaching the desired amount. Confirming the news earlier today, Tabcorp didn’t say that it would accept the bid.

Previously, Tabcorp rejected Entain’s $3 billion bid in February arguing that it undervalued the company’s assets. In the meantime, Tabcorp is in the process of an internal review, trying to assess whether it should sell its sports betting business or branch off two independent businesses, one running as the sports wagering arm and the other as the lotteries the company controls.

However, Tabcorp confirmed that it would assess Entain’s bid in the context of the ongoing strategic review. Tabcorp’s uniqueness in Australia is its main weakness, with the company running a successful retail business, but finding it harder to bring that same pull onto the online sports betting market.

For over a decade now, Ladbrokes and Sportsbet have been comfortably sinking their teeth into the Australian sports betting market with Tabcorp fighting its way from the fringes in. Yet, investors’ patience is wearing thin it seems, as a better future for the wagering division should be charted and enacted many believe.

Are More Bids Coming to the Table?

But while some investors may have grown impatient, others have been happy to make a move. Apollo and Lachlan Murdoch have shown interest in the betting business, seeing how it’s one of the founding operators in the Australian sports gambling market.

Neither party has delivered on their interest so far, bidding their time, perhaps, as Entain has been quietly upping its bid and respecting Tabcorp’s wishes. Ultimately, Tabcorp is willing to wait, as its business and infrastructure are important assets to have in the Australian betting market, which is walled off by regulation but marked by high profitability.

Tabcorp is most likely going to wait a little while longer to see if any of the aforementioned parties would make a bid themselves. The company though will seek to max out value for its shareholders, whether through splitting its divisions, selling the wagering arm or floating it, which is the least likely scenario it seems.

Entain argued that its bid was certainly superior to any other available one as of the moment of the issuance of the revised bid. Entain has another advantage, too. It owns Ladbrokes and Neds which together with Tabcorp could hold nearly half of the entire betting market, which is why Tabcorp probably thinks that while Entain’s offer is fair, it could probably be challenged to include other benefits for the company.

Entry from new bidders would certainly make the bidding more interesting. Tabcorp may not yet sell, though, and simply decide to split its businesses and run with it.

*All currencies listed in Australian dollars.