Tabcorp Holdings Limited (ASX: TAH) shares slipped today after the company announced a strategic review of its operations. At the close of trade today, the Tabcorp share price was trading at $4.69, down 2.7%
Let’s take a closer look at what the company announced.
Tabcorp share price slides after update
In early February, the Tabcorp share price went flying when news began circulating about a potential buyout of part of the gaming giant’s business. A media report in The Australian revealed that Tabcorp received a proposal to break up the $9 billion betting company. However, despite a release at the time stating the company was assessing the proposals and would update the market in due course, Tabcorp has remained tight-lipped on the matter.
Today, however, Tabcorp confirmed the company had received a number of “unsolicited approaches” and proposals. Furthermore, it was revealed that the offers were predominantly for the company’s wagering and media businesses, which were valued at $3 billion in the offer.
In review, the Tabcorp board has decided the proposals are not of sufficient value. As such, the offers will be rejected.
However, in light of the interest, the company has decided to perform a strategic review of the company. This is in order to assess structural and ownership options to maximise the value of the company for the shareholders.
Could wagering and media still be sold?
Notably, the company made clear there was still a possibility that its wagering and media division could be sold off. This could be done through a third party or even as a demerger.
A demerger would involve the separation of the wagering and media businesses or its lottery and keno division. Consequentially, the company is also reviewing its gaming services business.
Tabcorp chair Steven Gregg said of the review:
The assessment of Tabcorp’s strategic and ownership options includes, but is not limited to, a demerger or sale of one or more of our businesses.
Our clear objective is to ensure that we fully maximise the value of Tabcorp’s gambling entertainment businesses for our shareholders.
With no timeframe allocated to the review, shareholders will have to remain patient for the next parcel of information.
The review is being undertaken by the Tabcorp board of directors. In the meantime, the search for a new CEO has been put on hold until the review is completed.
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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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