Tabcorp Holdings to demerge Lotteries & Keno business creating two separate listed companies

SYDNEY, AUSTRALIA: Tabcorp Holdings Limited (Tabcorp) today announces that it intends to undertake a demerger of its Lotteries & Keno business.

The decision to pursue a demerger follows the conclusion of a comprehensive strategic review of all relevant structural and ownership options to maximise value for shareholders, as announced on 29 March 2021.

The demerger will create two standalone, market leading ASX-listed companies with distinct operating profiles, strategies and growth opportunities.

The demerger will create two standalone, market leading ASX-listed companies with distinct operating profiles, strategies and growth opportunities.

o Lotteries & KenoCo (comprising Lotteries & Keno): Australia’s leading lottery operator with licences to operate in all Australian states and territories except Western Australia. Licensee of Keno products to venues across NSW, Victoria, Queensland, South Australia and the ACT (including a digital licence). Chair designate: Steven Gregg; CEO designate: Sue van der Merwe.

o Wagering & GamingCo (comprising Wagering & Media and Gaming Services): TAB, Australia’s leading omni-channel wagering operator; Sky, a multi-venue, multi-channel racing and sports broadcaster; international businesses in the US and Europe, which are well established, profitable and growing; and MAX, Australia’s largest gaming services provider. Chair designate: Bruce Akhurst; CEO designate: Adam Rytenskild.

A demerger will also provide shareholders with the ability to value each business on a standalone basis, with a potential market re-rating of each business; and potential upside from any future domestic regulatory reform and international expansion opportunities in Wagering & Media.

Both companies are expected to have strong balance sheets to support their growth. Tabcorp has reached preliminary agreement with holders of its US Private Placement (USPP) notes that would result in these notes being allocated to Lotteries & KenoCo from the demerger date.

Lotteries & KenoCo is targeting an investment grade credit rating with a strong BBB band and Wagering & GamingCo is targeting credit metrics consistent with an investment grade credit profile.

Tabcorp Chairman Steven Gregg and the current Board of Directors of Tabcorp will oversee the implementation of the demerger, and David Attenborough will remain as Managing Director and CEO of Tabcorp until the demerger is completed.

Tabcorp is targeting completion of the demerger by the end of June 2022, subject to all relevant approvals.

Tabcorp Chairman Steven Gregg said: “Following a thorough and rigorous assessment of all relevant structural and ownership options, the Tabcorp Board of Directors has concluded that a demerger of the Lotteries & Keno business is the optimal and most certain path to maximise value for Tabcorp shareholders.

“The foundations have been laid for Lotteries & KenoCo and Wagering & GamingCo to deliver long term growth. The Tabcorp and Tatts integration has set up both businesses to benefit from enhanced scale and diversification.

“The two businesses are expected to be leaders in their respective markets, creating great experiences for millions of customers. They will both build on their heritage of sharing the benefits of their commercial success with governments, the racing industry, licensed venues, newsagents and other retail and business partners.

“Lotteries & KenoCo offers infrastructure-like qualities, with low capital intensity and upside from continuing digital growth. It is underpinned by its scale, portfolio of exclusive and/or long-dated state licences and attractive financial profile. It has a track record of strong and resilient cash flow generation, driven by its well-balanced portfolio of games, growing digital sales penetration and extensive retail footprint.

“Wagering & GamingCo will have national scale and reach, organic growth options, and potential upside from any future domestic structural reform and further international expansion. Wagering & Media has undergone a significant transformation and now has an omni-channel offering geared to create the best customer experience across all channels.

 Following the operational review of Gaming Services, which is being implemented, the business will continue as the largest gaming services provider in Australia with a simplified business model and streamlined operating cost base.”

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