Director, RaaS Advisory, Research as a Service (RaaS)

Research as a Service (RaaS)

Director, RaaS Advisory

Insightful Financial Models and Research Analysis

Connect to the right investors through smart and insightful financial models and research analysis.

Equity Bottom-Up

Betmakers Technology Group  / Equity Bottom-Up

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<h2>BetMakers Technology Group</h2>
<h3>Goliath walks away from offer, but still wants to deal</h3>
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<p>BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. In May, the company submitted an indicative proposal to acquire Tabcorp’s (ASX:TAH) wagering and media business for $4b, including $1b cash and $3.0b in BetMakers shares. Today, BET noted it had received notification from Tabcorp (ASX:TAH) that it had decided to pursue a demerger strategy for its businesses. TAH has rejected other offers for its wagering business, but stated that, as a result of the engagement with BET, TAH will continue discussions on commercial opportunities in international markets with BET. BET noted that it believed these opportunities to be significant. As we highlighted in our report of 22 June, Eyeing the prize in the US wagering market, BET is in the box seat to benefit from the introduction of fixed odds wagering in the US, a market which we estimate will grow to US$86b a year within 10 years. Our DCF valuation of $2.42/share incorporates this potential.</p>
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<p><strong>Business model</strong><br>BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Horse Racing and UK Greyhounds which are more aligned to share of turnover. The acquisition of Sportech delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It will also establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey.</p>
<p><strong>Strategically placed to capitalise on new US fixed odds opportunity</strong><br>As we highlighted in our 22 June report and concurrently published industry report, Fixed Odds Presents an Opportunity to Scale, BET, through its exclusive 10-year Fixed Odds agreement on thoroughbred horse racing in New Jersey, is strategically placed to capitalise on this emerging opportunity in the US. The Fixed Odds Bill has now progressed through both the New Jersey Senate and General Assembly and has been sent to the NJ Governor for approval. New Jersey was the first state to introduce Fixed Odds Sports Betting in 2018 and is now the leading state in the US in terms of handle. We see a similar pattern emerging in the US with BET being a key player in the market. PointsBet Holdings (ASX:PBH) has already recognised this, appointing BET as its exclusive supplier of Fixed Odds betting on horse racing in New Jersey. TAH likely recognises the stronghold BET has created in the US.</p>
<p><strong>DCF valuation is $2.42/share ($1.99b), focus on the US opportunity</strong><br>Our base case valuation is $2.42/share and captures the broader US fixed odds wagering opportunity. We assume BET maintains the ~25% share of market currently commanded by the Sportech tote business, except in NJ where it holds exclusivity for the next 10 years.</p>
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BetMakers Technology Group
Goliath walks away from offer, but still wants to deal

BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. In May, the company submitted an indicative proposal to acquire Tabcorp’s (ASX:TAH) wagering and media business for $4b, including $1b cash and $3.0b in BetMakers shares. Today, BET noted it had received notification from Tabcorp (ASX:TAH) that it had decided to pursue a demerger strategy for its businesses. TAH has rejected other offers for its wagering business, but stated that, as a result of the engagement with BET, TAH will continue discussions on commercial opportunities in international markets with BET. BET noted that it believed these opportunities to be significant. As we highlighted in our report of 22 June, Eyeing the prize in the US wagering market, BET is in the box seat to benefit from the introduction of fixed odds wagering in the US, a market which we estimate will grow to US$86b a year within 10 years. Our DCF valuation of $2.42/share incorporates this potential.





Business model BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Horse Racing and UK Greyhounds which are more aligned to share of turnover. The acquisition of Sportech delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It will also establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey.
Strategically placed to capitalise on new US fixed odds opportunity As we highlighted in our 22 June report and concurrently published industry report, Fixed Odds Presents an Opportunity to Scale, BET, through its exclusive 10-year Fixed Odds agreement on thoroughbred horse racing in New Jersey, is strategically placed to capitalise on this emerging opportunity in the US. The Fixed Odds Bill has now progressed through both the New Jersey Senate and General Assembly and has been sent to the NJ Governor for approval. New Jersey was the first state to introduce Fixed Odds Sports Betting in 2018 and is now the leading state in the US in terms of handle. We see a similar pattern emerging in the US with BET being a key player in the market. PointsBet Holdings (ASX:PBH) has already recognised this, appointing BET as its exclusive supplier of Fixed Odds betting on horse racing in New Jersey. TAH likely recognises the stronghold BET has created in the US.
DCF valuation is $2.42/share ($1.99b), focus on the US opportunity Our base case valuation is $2.42/share and captures the broader US fixed odds wagering opportunity. We assume BET maintains the ~25% share of market currently commanded by the Sportech tote business, except in NJ where it holds exclusivity for the next 10 years.









BetMakers Technology Group: Goliath Walks Away from Offer, but Still Wants to Deal

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<h2>BetMakers Technology Group Ltd</h2>
<h3>Eyeing the prize in the US wagering market</h3>
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<p>BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company’s technology and systems are used by every racing authority in Australia and most of the major online bookmakers. BetMakers is not a gaming company, it is a technology company that is facilitating commercial opportunities for racing authorities, rights holders, and corporate bookmakers while providing an improved racing experience for punters. The company is rapidly on a path to become a key player in the US horseracing industry which is poised to introduce fixed odds wagering. BET’s $4b indicative proposal for Tabcorp’s Wagering and Media assets, if successful, would add weight to is position in the US but is not essential to its success. With the New Jersey Senate voting, on June 21, unanimously to pass the Bill to authorise fixed odds wagering on horse racing in New Jersey, the industry now waits for the New Jersey Governor to sign the Bill into law. This is a significant step forward as it sets the scene for other US states to adopt similar legislation. Until now, our forecasts have only contemplated BET operating fixed odds wagering in NJ but with the acquisition of the Sportech tote and digital assets now finalised, we have now incorporated estimates for the whole US opportunity. This has resulted in our base case DCF valuation increasing to $2.42/share, from $1.16/share.</p>
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<p><strong>Business model</strong><br>BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The acquisition of Sportech delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It will also establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey. An acquisition of Tabcorp’s wagering and media business would likely add gravitas to BET’s position in the US market, but in our view is not essential for its success.</p>
<p><strong>New forecasts for US wagering support our upgrade</strong><br>The US fixed odds wagering opportunity has progressed rapidly with the New Jersey Senate unanimously (40-0) passing the Bill to authorise fixed odds wagering on horse racing. The Bill will now be sent to the NJ Governor for signing into legislation. We see this as a significant development as it will set the scene for other US states to adopt similar legislation. Our analysis of the potential market for US fixed odds betting, outlined in our concurrently published industry report, Fixed Odds Presents an Opportunity to Scale, highlights our expectation that the total US horse racing market could grow to US$86b within 10 years of the introduction of fixed odds, with fixed odds comprising 75% of total wagering. Extrapolating this to BET, we estimate that the fixed odds opportunity could conservatively grow from A$2.6m in year one to A$308m in revenues within 10 years.</p>
<p><strong>Base case DCF valuation upgraded to $2.42/share ($1.99b)</strong><br>Our base case DCF valuation has increased $2.42/share (previously $1.16/share) as a result of capturing estimates for the broader US fixed odds wagering opportunity. This assumes that BET maintains the ~25% share of market currently commanded by the Sportech tote business except in NJ where it holds exclusivity for the next 10 years. Our valuation does not include anything for a potential Tabcorp wagering deal, which has still some way to play out.</p>
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BetMakers Technology Group Ltd
Eyeing the prize in the US wagering market





BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company’s technology and systems are used by every racing authority in Australia and most of the major online bookmakers. BetMakers is not a gaming company, it is a technology company that is facilitating commercial opportunities for racing authorities, rights holders, and corporate bookmakers while providing an improved racing experience for punters. The company is rapidly on a path to become a key player in the US horseracing industry which is poised to introduce fixed odds wagering. BET’s $4b indicative proposal for Tabcorp’s Wagering and Media assets, if successful, would add weight to is position in the US but is not essential to its success. With the New Jersey Senate voting, on June 21, unanimously to pass the Bill to authorise fixed odds wagering on horse racing in New Jersey, the industry now waits for the New Jersey Governor to sign the Bill into law. This is a significant step forward as it sets the scene for other US states to adopt similar legislation. Until now, our forecasts have only contemplated BET operating fixed odds wagering in NJ but with the acquisition of the Sportech tote and digital assets now finalised, we have now incorporated estimates for the whole US opportunity. This has resulted in our base case DCF valuation increasing to $2.42/share, from $1.16/share.





Business model BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The acquisition of Sportech delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It will also establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey. An acquisition of Tabcorp’s wagering and media business would likely add gravitas to BET’s position in the US market, but in our view is not essential for its success.
New forecasts for US wagering support our upgrade The US fixed odds wagering opportunity has progressed rapidly with the New Jersey Senate unanimously (40-0) passing the Bill to authorise fixed odds wagering on horse racing. The Bill will now be sent to the NJ Governor for signing into legislation. We see this as a significant development as it will set the scene for other US states to adopt similar legislation. Our analysis of the potential market for US fixed odds betting, outlined in our concurrently published industry report, Fixed Odds Presents an Opportunity to Scale, highlights our expectation that the total US horse racing market could grow to US$86b within 10 years of the introduction of fixed odds, with fixed odds comprising 75% of total wagering. Extrapolating this to BET, we estimate that the fixed odds opportunity could conservatively grow from A$2.6m in year one to A$308m in revenues within 10 years.
Base case DCF valuation upgraded to $2.42/share ($1.99b) Our base case DCF valuation has increased $2.42/share (previously $1.16/share) as a result of capturing estimates for the broader US fixed odds wagering opportunity. This assumes that BET maintains the ~25% share of market currently commanded by the Sportech tote business except in NJ where it holds exclusivity for the next 10 years. Our valuation does not include anything for a potential Tabcorp wagering deal, which has still some way to play out.













BetMakers Technology Group Ltd: Eyeing the Prize in the US Wagering Market

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven


For the month of May, 11 new deals were discussed on Smartkarma with an overall announced deal size of ~US$7.3bn.



Clicking on the company name in the table below will take you to the entity page where you can read the initial insight(s) written by Smartkarma contributors on these new deals and follow-up discussions, or simply click on the insight link(s) below the name.







New Deals


Industry


Size (US$bn)


Type


Premium




Australia




APN Property Group (APD AU) 
Property
0.2
Scheme
50%


APN Prop (APD AU): Dexus' Done Deal



Boral Ltd (BLD AU) 
Construction
4.8
Off-market
Nil


Boral Ltd (BLD AU): Seven's Nil Premium



Japara Healthcare (JHC AU) 
Healthcare
0.2
Scheme
30%


Japara Healthcare (JHC AU): Here Comes The Calvary


 



Hong Kong




Chong Hing Bank (1111 HK) 
Banking
0.2
Scheme
51.2%



Chong Hing Bank (1111 HK): Takeover Talk As Shares Pop
Chong Hing Bank (1111 HK): Yue Xiu's Offer Is Light



 



Japan




Aomori Bank (8342 JP) / Michinoku Bank (8350 JP) 
Bank
0.6
Merger



Aomori Bank &amp; Michinoku Bank Merger - Nothing To Write Home About Yet



EPS Holdings (4282 JP) 
Data/software
0.1
Tender Offer
35.5%


Another Too-Cheap MBO as Founder Takes Out EPS


 Locoguide (4497 JP) / Kufu (4399 JP)

Real estate
0.4
Merger



Locoguide (4497 JP) - Kufu (4399 JP): Merger Is a Done Deal



Maruka Machinery (7594 JP) / Furusato Industries (8087 JP) 
Trading
0.4
Merger



A Complex SmallCap Merger in Japan: Maruka (7594) And Furusato (8087)



Secom Joshinetsu (4342 JP) 
Security
0.3
Tender Offer
66.2%


Secom To Finally Buy Out Affiliate Secom Joshinetsu (4342)








Malaysia




Can-One Bhd (CAN MK) 
Manufacturing
0.1
MTO
15.8%


Can-One (CAN MK)? Yeoh Can Lah!



IHH Healthcare (IHH MK) 
Healthcare
N/A
N/A
N/A


IHH Healthcare (IHH MK): More Medicine For Mitsui?


Source: Smartkarma Insights






The above does not include BetMakers Technology Group (BET AU) lobbing a non-binding offer of A$4bn (A$1bn cash, $3bn scrip into BET) for Tabcorp Ltd (TAH AU)'s wagering and media division, and Apollo's prior tilt - Tabcorp (TAH AU): Apollo Shows Its Hand.

Nor does the table include the rumoured merger between  Angang Steel Co Ltd (H) (347 HK) and Bengang Steel (000761 CH) - Amalgamated Steel: Merging Angang &amp; Bengang As, Bs, and Hs.



The average premium for the new deals announced (or first discussed) in May was ~41%, with a year-to-date average of ~31% (78 deals). This compares to the average premium for all deals in 2020 (158 deals) and 2019 (145 deals) of 31% and 31.5% respectively. 




Summary of News in May of Arb Situations On Smartkarma's Radar



(Again, click on the company names to take to you to the insights and/or discussion posts for a more comprehensive read-through on each situation)






Australia


Comments (with links to announcements &amp; insights)




3P Learning (3PL AU) 

No May update




Bingo Industries (BIN AU) 

1-May: Capital Group announced it has sold its entire 9.7% stake in Bingo Industries (BIN AU).




Crown Resorts (CWN AU) 

10-May: Crown Resorts: Blackstone &amp; Star Place Their Bets
17-May: Crown Says Blackstone's Bid Is Light. Undecided On Star
20-May: Crown Resorts Ltd: Blackstone Offer Rejected, Star Offer May Still Not Reflect True Forward Value




Galaxy Resources (GXY AU) 

No May update




Link Administration Holdings (LNK AU) 

27-May: Link Group (LNK AU): KKR Opens The Bidding For PEXA
31-May: Link Admin (LNK AU) Goes IPO Route For PEXA Afterall




Mainstream Group Holdings Ltd (MAI AU) 

2-May: Mainstream (MAI AU): More-Than-Double in Less than 2 Months After Apex Bump
6-May: Mainstream (MAI AU): Bidding War Continues as SS&amp;C Overbids for the 4th Time
14-May: Mainstream (MAI AU): +120% in ~2 Months but Bidding War Continues....




McPherson's Ltd (MCP AU) 

No May update




Mortgage Choice (MOC AU) 

26-Mau FIRB gives its approval



Primewest Group Ltd (PWG AU)

14-May: Target's Statement and Bidder's Statements were published. Primewest Group Ltd (PWG AU)'s Board has unanimously recommended shareholders to accept the Offer. 




Think Childcare (TNK AU) 

12-May: Think Childcare (TNK AU) has agreed to extend the Exclusivity Period with Busy Bees to 31st May 2021 (vs. original deadline of 14th May). This is still a non-binding deal with an expected completion date to be in 1Q CY22. 




Vitalharvest Freehold Trust (VTH AU) 

1-May: And so it goes - MAFM bumps its Offer for Vitalharvest Freehold Trust (VTH AU) to $1.26.
7-May: MAFM exercises a call option and acquires 16.2% of Vitalharvest Freehold Trust (VTH AU).
28-May Roc bumps its Offer for Vitalharvest Freehold Trust (VTH AU) to $1.29/share.  And says it will overbid any MAFM counter! 




Vocus Communications (VOC AU) 

10-May: Vocus Comms (VOC AU): MIRA/Aware's Done Deal
19-May: Vocus Comms (VOC AU): MIRA/​Aware’s Scheme Doc Despatched. EGM On 22 June










Hong Kong


Comments (with links to announcements &amp; insights)




Beijing Digital Telecom (6188 HK) 

1-May: Beijing Digital (6188 HK): Offer Now Open. IFA Says Fair
20-May: Beijing Digital Telecom (6188 HK)'s MGO is now unconditional in all respects. 




China Machinery Engineering (1829 HK) 

28-May: China Machinery Engineering (1829 HK): Movement In The Works?




China Traditional Chinese Medicine (570 HK) 

7-May: In its monthly update regarding a potential Offer, China Traditional Chinese Medicine (570 HK) says there is no update.




China Youzan Limited (8083 HK) 

10-May: China Youzan (8083 HK): Reality Check As Shares Rollover




Kerry Logistics Network (636 HK) 

4-May: Kerry Logistics Network (636 HK) will hold an EGM on the 26 May for shareholders to vote on the sale of the Hong Kong and Taiwan warehouse businesses to Kerry Holdings. 
26-May: At its SGM, Kerry Logistics Network (636 HK) shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.




New Century REIT (1275 HK) 

No May update




Rivera Holdings (281 HK) 

No April update




Sichuan Languang Justbon Service Group (2606 HK) 

3-May: Languang Justbon (2606 HK): Offer Now Open - For Up To Four Months










India


Comments (with links to insights)




Mphasis Ltd (MPHL IN) 

4-May: The Detailed Public Statement on Mphasis Ltd (MPHL IN) has been released. The Open Offer is scheduled tentatively to run from 18 June to 1 July, which means it is running Very Tight and the option is worth a bit less than I expected. But that just means there is more gamma. One could get big at the high Rs 1600s area. 




Vedanta Ltd (VEDL IN) 

4-May: Vedanta Now Caught Up With Peers - A Different Skew Ahead










Japan


Comments (with links to announcements &amp; insights)




BeNEXT Group (2154 JP) 
No May update



Cocokara Fine (3098 JP) 
No May update



Fuji Kosan Company (5009 JP) 
17-May:  Fuji Kosan Company (5009 JP) has responded to Aslead Strategic Value Fund's Tender Offer with its initial Target Opinion Statement which is "Opinion Withheld." This is because Fuji Kosan hasn't actually done anything yet - two weeks in. They have sent questions to Aslead, and Aslead has five business days to respond. This is slow-walking it. This tender offer is likely to be extended because of that.



Hitachi Metals (5486 JP) 

5-May: Hitachi Metals - Should I Stay or Should I Go Now?




Honshu Chemical Industry (4115 JP) 

13-May: Honshu Chemical (4115) Shareholders Perhaps One Day From a Wrong Price Takeover
16-May:: Honshu Chemical Shareholders Get the Short End of the Stick As The Board Is Ex-Gourd




Invesco Office J Reit (3298 JP) 

6-May:  Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight
11-May:  Starwood Bumps Terms, Lowers Threshold on Invesco Office
13-May:  Invesco Office's Terrible, Horrible, No Good Very Bad Day... Changes Things
20-May:  Invesco Office's Beige Knight (Deemed Dirty Gray By Markets) Suddenly Looks Brighter and Whiter
23-May:  Starwood Responds to Invesco Office's White Knight Proposal
24-May: Starwood has extended their Tender Offer on Invesco Office J Reit (3298 JP) from the 24th of May to 15th of June after the close of the 24th. They did not raise the price. This is basically the equivalent of Starwood calling Invesco's bluff. They can extend again if they want but they are going to make Invesco come out. They can change price later if they think it necessary.



Japan Asia (3751 JP)
No May update



Sawada Holdings (8699 JP) 

9-May:  Sawada Selldown Was NOT Done - Shareholder Structure Looks Different Now
23-May: Sawada Is A Different Stock Now
31-May:  Be Careful of Expectations on Sawada (8699)




Toshiba Corp (6502 JP) 

14-May: Toshiba – Shareholder Returns Trump Weak Guidance
17-May: Toshiba Results &amp; Shareholder Return - Possibly Big Impact Buyback Coming











New Zealand


Comments 




Tilt Renewables Ltd (TLT NZ) 

No May update











Singapore


Comments (with links to announcements)




Procurri Corporation (PROC SP) 

3-May: The Partial Offer has not become unconditional in all respects on the Closing Date and has therefore lapsed










Thailand


Comments




Intouch Holdings (INTUCH TB) 

No May update




Vinythai Public Co (VNT TB) 

No May update






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<h2>BetMakers Technology Group</h2>
<h3>A transformational David and Goliath deal</h3>
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<p>BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company has announced it has submitted an indicative proposal to acquire Tabcorp’s (ASX:TAH) wagering and media business for $4b, including $1b cash, to be funded through debt financing, and $3,0b in BetMakers shares, which equates to approximately 1.79b shares. The share consideration has been priced at a 15% premium to the 10-day volume weighted average price (VWAP) to 26 May (~$1.46). The deal would give TAH around 65% of the combined BET/TAH wagering and media business. BET has proposed that share consideration be distributed in specie to Tabcorp shareholders on a pro rata basis. The combined entity would be moderately geared at less than 2.5x net debt/EBITDA on a pro forma basis. Tabcorp noted it has received the unsolicited, non-binding and indicative proposal and that the board has not yet formed a view on its merits. It will be assessed in the context of TAH’s previously announced strategic review which is evaluating all structural and ownership options, including the potential sale or demerger of its Wagering and Media businesses, to maximise the value of TAH’s businesses for the benefit of shareholders.</p>
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<p><strong>Business model</strong><br>BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. Over time we expect the SaaS revenue share to average ~45-50% as the company expands its racing data and informatics platforms and new integrity platforms in both Australia and offshore.</p>
<p><strong>Transformational transaction if it proceeds</strong><br>BET’s indicative proposal is a potentially transformational deal for both companies if it proceeds. The transaction is conditional on the completion of due diligence, and likely approvals from the ASX, racing industries, BetMakers and potentially Tabcorp shareholders. The $4b indicative proposal implies a transaction multiple of 10.8x the wagering and media division’s FY20 EBITDA ($371m). If it proceeds, we see the addition of TAH’s wagering and media division adding weight to BET’s competitive standing in its US wagering operations. Tabcorp has long been criticised for not more aggressively pursuing opportunities in the US market. This transaction potentially will unlock those opportunities for TAH shareholders.</p>
<p><strong>Forecasts under review</strong><br>As flagged in our flash comment of May 21, our BET forecasts are under review, giving due consideration to the US fixed odds wagering industry. Our current forecasts only contemplate revenues derived from fixed odds wagering in New Jersey which is close to finalising its legislation. The Tabcorp wagering and media acquisition, should it proceed, will also be transformational for our forecasts. In FY20, the wagering and media business reported revenues of $2.1b and EBITDA of $371m.</p>
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BetMakers Technology Group
A transformational David and Goliath deal

BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company has announced it has submitted an indicative proposal to acquire Tabcorp’s (ASX:TAH) wagering and media business for $4b, including $1b cash, to be funded through debt financing, and $3,0b in BetMakers shares, which equates to approximately 1.79b shares. The share consideration has been priced at a 15% premium to the 10-day volume weighted average price (VWAP) to 26 May (~$1.46). The deal would give TAH around 65% of the combined BET/TAH wagering and media business. BET has proposed that share consideration be distributed in specie to Tabcorp shareholders on a pro rata basis. The combined entity would be moderately geared at less than 2.5x net debt/EBITDA on a pro forma basis. Tabcorp noted it has received the unsolicited, non-binding and indicative proposal and that the board has not yet formed a view on its merits. It will be assessed in the context of TAH’s previously announced strategic review which is evaluating all structural and ownership options, including the potential sale or demerger of its Wagering and Media businesses, to maximise the value of TAH’s businesses for the benefit of shareholders.





Business model BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. Over time we expect the SaaS revenue share to average ~45-50% as the company expands its racing data and informatics platforms and new integrity platforms in both Australia and offshore.
Transformational transaction if it proceeds BET’s indicative proposal is a potentially transformational deal for both companies if it proceeds. The transaction is conditional on the completion of due diligence, and likely approvals from the ASX, racing industries, BetMakers and potentially Tabcorp shareholders. The $4b indicative proposal implies a transaction multiple of 10.8x the wagering and media division’s FY20 EBITDA ($371m). If it proceeds, we see the addition of TAH’s wagering and media division adding weight to BET’s competitive standing in its US wagering operations. Tabcorp has long been criticised for not more aggressively pursuing opportunities in the US market. This transaction potentially will unlock those opportunities for TAH shareholders.
Forecasts under review As flagged in our flash comment of May 21, our BET forecasts are under review, giving due consideration to the US fixed odds wagering industry. Our current forecasts only contemplate revenues derived from fixed odds wagering in New Jersey which is close to finalising its legislation. The Tabcorp wagering and media acquisition, should it proceed, will also be transformational for our forecasts. In FY20, the wagering and media business reported revenues of $2.1b and EBITDA of $371m.









BetMakers Technology Group: A Transformational David and Goliath Deal

Australia

Betmakers Technology Group Ltd operates as a software development company. The Company designs and develops odds comparison and intelligent betting platforms, as well as analytics and trading solutions. Betmakers Technology Group serves customers in Australia.

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Betmakers Technology Group (BET AU)

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(Mostly) Asia M&A: May 2021 Roundup

The average premium for the new deals announced (or first discussed) in May was ~41%, with a year-to-date average of ~31% (78 deals).

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