Australia's incumbent wagering and lotteries operator, Tabcorp, soared 16% on Friday, following a media report suggesting that private equity firms were interested in launching a bid for the entire business, or possibly just its struggling wagering division.
The play by two private equity consortiums would see Matthew Tripp, of SportsBet success, leading the operation. Mr Tripp took SportsBet from a $250,000 startup to a $388 million company upon its sale to Paddy Power in 2011. One of them is reportedly keen to purchase Tabcorp in its entirety for close to $9 billion, while the other is purely interested in Tabcorp’s betting arm, valuing it at approximately $3 billion.
Tabcorp subsequently released a statement noting it “is not aware of, and has not received, any proposal in respect of the company or its businesses”. That didn't stop the stock closing near to the day's high of $4.15.
Tabcorp has had a rough year, with revenue and profit declining in 2020. Group revenue was down 4.8% and EBITDA down 11.5% vs FY19, primarily due to COVID-19. While the lotteries business saw marginal growth, Wagering and Gaming Services were heavily impacted by retail closures. FY21 first quarter metrics are also reflecting a continuation of the poor performance seen for FY20.
Tabcorp's share price has also struggled, even with Friday's jump, it is still down approximately 13% for the year.