Tabcorp lotteries miss split party

For Tabcorp investors, however, it seems that strategic and/or financial interest is a little thin on the ground. The heavyweight Pacific Consortium, led by Macquarie, who made a play for the unit five years ago, has split up, and there are no signs of a revival.

Some of the members are said to be more concerned about the ESG angle in owning a lottery business than they were five years ago.

A mock poll of TMET and infrastructure bankers also suggests there is little expectation of a swooper trying to derail the split. Although any discussion is highly confidential, it is quite difficult to hide a potential $15 billion&A deal in Australia’s small market, especially when it would involve a lot of debt.

So unless there is a change of heart at the 11th hour, it looks like Tabcorp’s TLC is headed for the ASX.

If there is a swooper, it should appear soon. Bankers say it’s difficult for a poacher to derail such a big split – and especially one so popular with Tabcorp shareholders – once the official paperwork has been cleared by the court and sent to shareholders.

Analysts dig into the unit’s past performance and outlook, knowing they’ll likely have a big new company to cover soon. Barrenjoey analysts estimate that Tabcorp’s lottery and keno unit could report EBITDA of $768 million in fiscal 2023, giving it a value of $14.2 billion or $18.5 times the profits.

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