Tabcorp lotteries split continues – ShareCafe
Tabcorp has revealed more details about its plans to spin off its lotteries and keno businesses, with the new entity set to debut on the ASX on May 24 if the split is approved by investors.
The new company will be called The Lottery Corporation.
Tabcorp is urging shareholders to approve the split at a general meeting on May 12.
But program documentation reveals a potential legal challenger to the NSW race split who fears the Tabcorp split could weaken the race.
The split plans were first revealed in early July last year after Tabcorp rejected plans to retain the lottery business and sell its betting business for a potential £3.5bn. dollars to potential suitors from Australia, the United Kingdom and the United States.
Now, Tabcorp believes the spin-off will help each company better focus on growing the business and allow shareholders to benefit from “any future M&A activity”.
Tabcorp also presented a list of potential downsides and risks of the split, including costs, potential delays, regulatory hurdles, lack of court approval and uncertainty regarding the market value of the two new companies. .
But Racing NSW boss Peter V’landys has written to Tabcorp threatening legal action. He says the move could spell “financial disaster” for the racing industry.
Tabcorp revealed in Thursday’s split report that it had received correspondence over the past two years from Racing NSW warning that the planned split would impact the racing industry and reduce its financial returns.
“Racing NSW has indicated that it may take action against Tabcorp in relation to the above matter which it believes may affect the implementation of the split,” it said in the booklet.
Contacted for comment, Mr V’landys confirmed to Nine/Fairfax that he was considering legal action on behalf of his organisation.
“My job is to protect NSW’s 50,000 racing industry participants and as things stand this split would be a financial disaster for NSW Racing,” Mr V’landys told the Nine Papers.
The odds of V’landys succeeding are not good.
In 2017, Racing Victoria opposed the then merger proposal which saw Tabcorp eventually absorb Tatts (this merger is effectively undone by Tabcorp’s split). The previous merger promised an additional $50 million per year across all races. Tabcorp could very easily cancel the V’landys noise by making a similar commitment.
In a letter to Tabcorp shareholders with the split document, Chairman Steven Gregg said the split was a decision taken after reviewing offers for British betting giant Entain’s betting, media and gaming services businesses. , private equity giant Apollo and betting technology group BetMakers. .
“After carefully evaluating the proposals as part of the strategic review, the board determined that it preferred the merger on the grounds that it presented the safest and most expedient path, with fewer regulatory hurdles. , to maximize value for Tabcorp shareholders.”
Current Tabcorp shareholders will retain their existing shares and will receive one Lottery Corporation share for each Tabcorp share held on the record date, scheduled for Wednesday, May 25.
Shares of Tabcorp ended the day nearly 2.5% higher at $5.34, a performance that tells us investors are not taking the threat from Racing NSW and Mr V’landys very seriously.