Apollo offers $3.1b for Australia sports betting business

Alternatively, the private equity firm is interesting in acquiring the wagering and media assets alone for A$3.5 billion. A Tabcorp filing refers to it as a revised proposal, but this is the first time Apollo has been identified as a bidder.

Tabcorp said in February that it had received unsolicited approaches regarding the wagering and media business, which comprises sports betting platforms Tab and Ubet and broadcaster Sky Racing. This prompted a strategic review of the business and the resumption of an earlier review of the gaming services operation, which maintains gambling machines for third-party customers.

UK-listed sports betting and gambling company Entain offered A$3 billion for the wagering and media business in February. This was rejected, so it upped the price to A$3.5 billion in late April.

Apollo’s involvement continues the trend of private equity interest in Australian gambling assets. In March, The Blackstone Group made an A$8 billion offer for casino and hotel operator Crown Resorts. Oaktree Capital Group then entered the fray, proposing a A$3 billion financing package that would enable Crown to buy back founder James Packer’s 37% stake.

Four years ago, Morgan Stanley Infrastructure, KKR, First State Super, and Macquarie challenged Tabcorp’s A$11.3 billion merger with lottery operator Tatts Group, submitting a A$7.3 billion buyout offer for Tatts. This was rejected, as was an improved bid of A$7.6 billion.

The merger closed in late 2017, combining Tabcorp’s wagering and media and gaming services businesses with Tatts’ nationwide lottery network – games can be played online or via mobile app as well as in-store – under brands such as Tatts, Golden Casket, NSW Lotteries and SA Lotteries.

Tabcorp posted A$5.22 billion in revenue for the 12 months ended June 2020, down from A$5.48 billion a year earlier. It swung from a net profit of A$361 million to a net loss of A$870 million. Wagering and media and gaming services were hit hard by retail closures linked to efforts to contain the spread of COVID-19. In contrast, the lotteries and keno business was relatively unaffected.

Lotteries and keno generated revenue and EBITDA of A$2.92 billion and A$542 million, respectively up 1.8% and 5.7% year-on-year. Wagering and media revenue fell 10.1% to A$2.1 billion, while EBITDA declined by 19.5% to A$371 million. The gaming services division saw revenue and EBITDA fall 27.3% and 42.5%, hitting A$221 million and A$84 million.

Wagering and media revenue stabilized in the first half of the 2021 financial year, but the business remains imbalanced. There was rapid growth in digital turnover while retail turnover declined as venues operated at reduced capacity. Gaming services continued to struggle for the same reason.

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• Topics
• Australasia
• Media
• Buyouts
• Australia
• Apollo Global Management