After announcing its acquisition of BetMakers on Tuesday, Tabcorp's executive team described the move as the "cheapest and most efficient" way to restructure the company's technology framework. Tabcorp acquired all BetMakers shares at AU$0.24 (approximately US$0.17 per share), bringing the total valuation of BetMakers to about $283 million, with an enterprise value near $267 million.
The company anticipates annual cost synergies of up to $30 million by the end of the second year following the acquisition. These savings are expected to primarily arise from the integration of BetMakers' advanced technology suite, data center rationalization, contract consolidations, and streamlined corporate functions.
On a call with analysts, Tabcorp CEO Gillon McLachlan emphasized that the decision to opt for BetMakers instead of developing technology in-house was driven by the potential cost synergies. He explained that the acquisition offered a quicker, more economical means of updating Tabcorp's legacy systems.
According to Chief Technology Officer Robert Fraser, BetMakers' cloud-native and asset-light technology platform will play a crucial role, already generating profitable operation with reduced execution risks compared to internal transformations. He pointed out that Tabcorp had accumulated a significant amount of legacy technology, including a mix of on-premise and cloud infrastructure, as well as various third-party services.
"The cost synergies will be delivered with BetMakers much faster and cheaper than we would be able to do ourselves," Fraser stated, further noting that this conclusion emerged from thorough analysis of alternative options.
Chief Financial Officer Mark Howell described the acquisition as "sort of the cheapest and most efficient way home," characterizing it as the lowest risk strategy for modernizing Tabcorp's technology stack.
As part of the acquisition, Tabcorp plans to utilize BetMakers' technology and distribution networks to develop a comprehensive, integrated offering that combines racing media, data, wagering technology, and tote services to engage with international markets. This will include the integration of BetMakers' racing data into Tabcorp’s Sky Racing media coverage, enhancing data analysis capabilities, according to McLachlan.
"Ultimately, what we’re talking about is having a full suite of vision, data, technology, and wagering services available end-to-end and distributed to significant territories worldwide. BetMakers has complementary assets, though the timing and specific opportunities in each market will vary," he outlined. He also highlighted BetMakers' strengths in customer intelligence and media capabilities, adding to its appeal.
Prioritizing the retention of key individuals from BetMakers during the integration process, the Tabcorp executives indicated that the leadership of the new technology division would be composed mainly of new recruits. Fraser will lead this technology team, and McLachlan noted their clear targets and established structure to guide them.
The integration team is expected to be familiar with the legacy systems thanks to their involvement in a previous demerger process. McLachlan expressed optimism about infusing new talent from BetMakers, especially those engaged in early AI adoption, stating, "They’re proven in digital transformation and we’ll harness that capability. Their focus on being lean, efficient, and quick resonates with the culture we are developing at Tabcorp."
