Speculation of a raid or private equity “hug” on Tabcorp, the sluggishly performing gaming giant, won’t come as much of a surprise to NSW punters using the TAB’s outlets in the state.
The shares hit $18 late Tuesday as speculation surfaced that Macquarie Bank was preparing a bid with either PBL or international private equity players. It wouldn’t be before time for the suffering shareholders or punters.
The board bumped CEO Matthew Slatter last month after a sharp slump in first-half earnings and reports that the company’s performance had not improved in the second half. Former ANZ banker and recent recruit Elmer Funke Kupper was named interim CEO and seems to be making a determined attempt to take the top job full-time.
One thing he is looking at is a problem in the $50 million upgrade of the NSW TAB, which has fallen drastically behind the Victorian TAB, which forms the heart of Tabcorp. The problems of lower betting levels, higher costs and sloppy management in the NSW TAB, allied to the impact of smoking bans on its Queensland Casinos business, were the main reasons first-half earnings fell.
It can’t do anything about the smoking bans (and they are coming in NSW shortly) but it could do something to upgrade the NSW TAB’s betting systems.
These have hit a hitch. The new computerised betting system has changed the amount of information given on each ticket. Previously, punters got the race meeting, race number, horse’s number and name, type of bet, amount of winning wager, date, barcode and other bits and pieces. Slips delivered by early types of the new betting consoles have been issuing that information, with one exception: the name of the horse/horses backed in the bet.
Punters have rebelled, refusing to bet at clubs, pubs or outlets using the new system and going elsewhere. Agencies are not happy and some have refused to allow their machines to be upgraded. The end result is that Tabcorp put the upgrade on hold while it figures out changes to meet the demands of punters and NSW agents who say it is systematic of the way Tabcorp is being managed.
The feeling among some shareholders is that — unlike the Qantas, Rinker, Bendigo Bank and Orica situations — a decently priced offer would see Tabcorp snapped up, such has been the disappointment in its performance.
As well, chairman Michael Robinson said he would be going, plus at least one other board member. Former Australian rugby union and banking heavy John O’Neill was named to the board as one new director; he could have a short stay.