The move by Tabcorp to announce a demerger of its casino, gaming and wagering business into two separate entities has put the entire company into play, with local and international operators believed to be eying up the various parts of the
The demerger proposal, rolled out at the same time as a $430 million accelerated renounceable equity issue, reflects the need to overhaul the Tabcorp business, its board and strategy.
It was a step shareholders had called for at least two years ago, given the continued erosion of value in the group's various businesses, market share and earnings.
While the demerger has a deadline of July 1 next year, it is expected to flush out interested buyers well before then.
Shares were put into a trading halt as the company launched the equity issue. Proceeds will go towards the huge bill for tarting up the Star City Casino in Sydney as well as Jupiters on the Gold Coast.
The one-for-nine equity issue at $6.25 represents a 12 per cent discount to the last closing price of $7.10 a share.
The most widely tipped buyer for the company's four casinos is Crown, which hit the headlines last week when its major shareholder, James Packer's Consolidated Press Holdings' lifted its stake in Crown by almost 3 per cent to 43 per cent. Tatts and British gambling group Ladbrokes would look at its wagering operations.
Globally, tougher regulation is costing businesses money, and in Australia, listed stocks including Tabcorp, Tattersall's and Crown are witnessing regulatory changes, tougher legislation and stiff competition from internet players.
The local risk hit home two years ago when the Victorian government shocked the industry by announcing the Tabcorp-Tattersall's duopoly in Victoria would end in 2012.
The Victorian government refused compensation, despite legal threats from both companies.
The next big decision will be the Victorian wagering licence, which is currently held by Tabcorp until 2012. There are plenty of rivals trying to upset the incumbent and snare the prize.
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BusinessDay
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