By Andrew Starke

Gaming giant Tabcorp has announced plans to proceed with a demerger to create two gaming companies that will both be listed on the Australian Securities Exchange (ASX).

The ambitious revamp will see its casino business delisted from its wagering, gaming and keno operations.

The latter will retain the Tabcorp name.

Tabcorp hopes to complete the demerger by July 1, 2011, subject to regulatory approval.

Tabcorp chief executive Elmer Funke Kupper will guide the company through the demerger period before handing the company’s casino business over to Larry Mullin and Tabcorp to David Attenborough next year.

It is expected that Funke Kupper will join the board of Tabcorp as a non-executive director six months after ceasing his executive role.

The casinos business will have more than 8,000 employees and the wagering, gaming and keno business will have more than 2,000 employees.

Tabcorp Chairman, John Story said a demerger of the casinos division recognized the different growth, investment and management characteristics of Tabcorp’s businesses.

“Over the past decade, Tabcorp has built three strong operating divisions which are each of a substantial size and market leaders in their own right,” he said.

“The priorities for these businesses have started to diverge, and will increasingly do so in the future. There is now a compelling case to give investors shares in the separate businesses and by doing so provide greater investment choice and the opportunity to manage their exposure to the different assets.”

“The demerger will create two large ASX listed entities able to pursue their separate strategies, with casinos to benefit from material capital investments, and the wagering, gaming and keno businesses well positioned within a rapidly evolving retail and online environment,” he continued.

Tabcorp CEO, Elmer Funke Kupper, said the timing for the proposed demerger was right for shareholders, employees and other key stakeholders.

“We have spent several years improving the performance of our businesses and each one is now showing positive growth,” he said.

“Our wagering business has proven to be a strong performer over the past 12 months and continues to adapt well to an evolving regulatory environment and an increasingly competitive marketplace.”

Trading in Tabcorp shares have been halted at the company’s request but were last quoted at $7.10 on Friday (Oct 15).

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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