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Mergers & Acquisitions

Advantage Entain: Analysts feel Apollo's Tabcorp bid faces challenges

Recently, Apollo Management made a $2.7bn bid for Tabcorp’s Wagering and Media arm, matching an Entain proposal sent in April.

Tab

But since Apollo is not a proven wagering operator, MST Maquee gaming analyst Rohan Sundram believes would be difficult for the company to gain support within the racing industry, as quoted by the Sydney Morning Herald.

Due to Tabcorp’s agreement with several state racing bodies, a takeover from Apollo may complicate the process.

Sundram says the Australian state racing bodies will play a big part in the sale of Tabcorp, since a new owner will need to renegotiate Tabcorp’s retail and betting licences.

Therefore, partners and bodies tied down with Tabcorp will want to prioritise a new owner they feel will be the best at competing in the industry.

The episode may bear resemeblance to Apollo's bid for William Hill's US assets, with William Hill instead being taken over by Caesars Entertainment.

Earlier in February, Influential Racing NSW chief executive Peter V’landys said any deal for Tabcorp assets would need his approval.

In support of Sundram, Evans and Partners analyst, James Fuller, agrees that the racing industry will affect Apollo’s bid.

He says that, unlike Entain, Apollo does not have local or global wagering operations that can be used to enhance the value of Tabcorp’s wagering and returns.

Of course, it remains to be seen whether Apollo will be succesful in its Tabcorp takeover bid. But so far analysts aren't convinced, leaving Entain in pole position.

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