Tabcorp share price down 82% following lotteries and wagering demerger

Tabcorp’s shares have tanked more than 80% following the protracted demerger of its lotteries and keno division and wagering and gaming arm into separate entities. Having closed at A$5.34 (£3.02), at the time of writing, the share price of the now-wagering and gaming company was down to A$1.06 – dangerously close to the company’s 52-week low of A$0.93. The successful demerger, which took place on 24 May, removed 56% of Tabcorp’s yearly revenue, with lotteries and keno having accounted for A$3.21bn of the company’s A$5.79bn total revenue in 2021 As part of the deal, Tabcorp retains a number of wagering, media and gaming services including TAB, MAX and Sky Racing. Conversely, the spin-off entity, Lottery Corp’s shares were around A$4.70 on its first day of trading on the ASX indices. This has, however, created value for Tabcorp shareholders who were also given one share in Lottery Corp for every one share held in Tabcorp. Back in July 2021, Tabcorp said that following two failed bids of A$3bn and A$4bn, respectively, from Entain and Apollo for its wagering division, that it would demerge the two entities – lottery and wagering. In March 2022, the Supreme Court ratified the demerger, and on 13 May, more than 99% of Tabcorp shareholders approved the deal. Tabcorp chair Steven Gregg has been appointed as chair for Lotto Corp with Sue van der Merwe as CEO. Speaking to The Australian Financial Review on the first day of trading, van der Merwe said: “We feel it’s important we focus on the current business, and we don’t lose sight of the importance of that. “Having said that, opportunities to grow outside that are something of interest to us and something we need to unpack more with the board in the coming months.”