Tabcorp Remains Overvalued as Potential Suitors Circle the Wagering and Media Business

Amid increasing uncertainty around the future of the beleaguered wagering and media business, shares in no-moat Tabcorp remain overvalued. Entain's increased offer of AUD 3.5 billion (from AUD 3 billion previously) for the wagering and media division appears to more fairly value the segment, marginally ahead of our preliminary valuation of around AUD 3.2 billion, but not enough for Tabcorp to halt its strategic review. Indeed, there are hurdles--the board is yet to assess the proposal, which is highly conditional, and we anticipate regulatory obstacles. Given current uncertainty around ownership structure with the ongoing strategic review, we continue to value Tabcorp on a standalone basis and maintain our AUD 3.40 fair value estimate.