Tabcorp Plans an Operational Stock Split

Australian gaming company, TabCorp (ASX:TAH) is planning to split its stocks into two: separating its company into two parts – its casino business and its wagering, gaming and Keno enterprise. From July next year, the two separate entities will be listed on the Australian Securities Exchange. The company hopes to raise $430 million to redevelop its casinos and lure punters away from Crown. "We're setting up the two businesses with the right capital structure to allow them to go forth as substantial listed entities in their own right," said managing director Elmer Funke Kupper to ABC.

The money will go toward a $1 billion transformation of the group's casino properties, including the ongoing $960 million upgrade and renovation of the Star City Casino in Sydney and a $175 million redevelopment of the Jupiter Casino on the Gold Coast. The casino business hopes to lure VIP customers away from Crown Casino in Melbourne by building one or two new five star hotels and expanding their presence in Queensland. The demerger has left both companies open to takeover, with Crown (ASX:CWN) interested in the casino business and Tatts Group (ASX:TTS) the wagering operations.

Tabcorp executives hope the split will unlock about $1 billion in value by creating two businesses worth almost $7 billion, including debt. After the split, the casino business will own Star City, Jupiters Gold Coast and Brisbane's Treasury, and will have a tentative value of more than $4 billion, including debt. The wagering business is tipped to have an enterprise value of close to $3 billion and will take in totalisators in New South Wales and Victoria, bookmaker Luxbet and the Victorian Keno licence. To go ahead, the deal requires approval from shareholders, gaming regulators and US debt holders, who are owed about $880 million.