The Tabcorp Holdings Limited (ASX:TAH) share price has bolted more than 10% in today's trading session. The bullish price action follows the company's response to recent media speculation concerning a potential buyout.
What has the media been speculating?
A media report in The Australian earlier today revealed that Tabcorp recently received a proposal to break up the $9 billion betting company. According to the media report, the company's board received a proposal in the past 2 weeks. The article suggested that the offer involved a demerger of the company's lottery business and takeover of Tabcorp's wagering division.
Since late 2020, media speculations have been circling the potential interest from private equity to buy Tabcorp's struggling wagering division. In November last year, The Australian also reported that private equity firms had approached Tabcorp. One offer was reportedly worth $9 billion.
Tabcorp initially denied early suggestions that the company had been approached.
How has Tabcorp responded?
In response to the media report published by The Australian, the company released an announcement earlier today.
In the media release, Tabcorp acknowledged that the company has received multiple offers for its underperforming wagering business. However, the company also cautioned investors that interest from multiple parties might not lead to a transaction.
In the announcement, the company stated that: "Tabcorp confirms that it has received a number of unsolicited approaches and proposals in relation to a potential transaction involving Tabcorp's Wagering and Media business".
Tabcorp further explained that: "The proposals were expressed to be confidential, indicative, non-binding and subject to numerous conditions including due diligence, financing and various regulatory approvals".
Tabcorp acknowledged that the company's board is assessing the proposals. The company also stated that it will provide an update to the market in due course.
How has the Tabcorp share price reacted?
The Tabcorp share price closed Tuesday's trading session more than 8.7% higher at $4.46. Shares in the lotteries and wagering giant hit an intra-day high of $4.58. Up more than 10% for the day at one stage.
Last August, Tabcorp was forced to raise $600 million in response to the COVID-19 pandemic and its effect on the company's wagering business. Since late March, the Tabcorp share price has surged more than 110% from its 52-week low.
