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BetMakers (ASX: BET) will not progress with its $4 billion proposal to acquire the wagering and media business of Tabcorp (ASX: TAH) after the latter today announced plans to demerge its lotteries and Keno business.
The demerger, which would create two standalone ASX-listed companies, follows the conclusion of a strategic review by Tabcorp to maximise value for shareholders.
If it goes ahead there will be two companies on the ASX with "distinct operating profiles, strategies, and growth opportunities": Lotteries & Keno Co (comprising TAH's lotteries and Keno businesses) and Wagering & GamingCo (made up of TAH's wagering & media and gaming services businesses).
As such, BetMakers Technology Group has decided to ditch plans for a partial takeover of Tabcorp, and will instead continue discussions with the company in relation to commercial opportunities in international markets.
"Having received clarity from Tabcorp regarding the planned direction for its Wagering and Media business, BetMakers will continue discussions with Tabcorp regarding international opportunities, and we believe these opportunities have the potential to be significant," says BetMakers CEO Todd Buckingham.
"BetMakers remains firmly of the view that the company's opportunities in regulated wagering jurisdictions, and in particular Australia and the United States, are a clear priority and we will continue to explore all opportunities that can accelerate or capitalise on this foundation."
Tabcorp rolls the dice with demerger
If the proposed demerger goes ahead Tabcorp chairman Steven Gregg is expecting shareholders to benefit from the separation.
The demerger will create two companies. One will be called Lotteries & Keno, a lottery operator with licences to operate in all Australian states and territories except Western Australia and will be the licensee of Keno products to venues across New South Wales, Victoria, Queensland, South Australia and the ACT.
Lotteries & Keno will be led by current Tabcorp chair Steven Gregg and CEO Sue van der Merwe who is now the managing director of the division as part of the united company.
Meanwhile, Wagering & GamingCo will operate TAB, racing and sports broadcaster Sky, the group's international businesses in the US and Europe, as well as gaming services provider MAX.
Current non-executive director Bruce Akhurst will chair the spinoff and Adam Rytenskild will step up into the role of CEO of Wagering & GamingCo.
"The two businesses are expected to be leaders in their respective markets, creating great experiences for millions of customers," says Tabcorp chairman Steven Gregg.
"They will both build on their heritage of sharing the benefits of their commercial success with governments, the racing industry, licensed venues, newsagents and other retail and business partners."
If the demerger is implemented, Tabcorp shareholders will receive Lotteries & KenoCo shares in proportion to their existing shareholding in TAH, while also retaining their existing shares in the company.
The proposal requires approval from regulatory bodies and stakeholders, and will cost Tabcorp between $225-275 million to complete.
Shares in TAH are down 4.81 per cent to $4.95 per share at 11.38am AEST.
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