Tabcorp's recent acquisition of BetMakers has been framed by the Australian company’s executive team as a strategic decision aimed at modernizing its technology stack at a minimal cost. During a call with analysts following the announcement on Tuesday, they described BetMakers as the "cheapest and most efficient" option available.
Tabcorp acquired 100% of BetMakers' shares at AU$0.24 (US$0.17) each, which places the total valuation of BetMakers at approximately AU$283 million, with an enterprise value nearing AU$267 million.
The company expects to achieve annual cost synergies up to AU$30 million by the end of the second year post-acquisition. Most of these savings are anticipated to arise from technology improvements, which include the integration of BetMakers' advanced product suite, the consolidation of data centers, and the streamlining of various corporate and support functions.
CEO Gillon McLachlan explained that the decision to partner with BetMakers instead of pursuing in-house technology solutions was influenced heavily by the cost synergies expected from this acquisition. He underscored that this approach would serve as a faster and more cost-effective means of modernizing Tabcorp's longstanding technology systems.
CTO Robert Fraser emphasized the advantages of BetMakers' cloud-native and asset-light technology platform, noting that the platform operates profitably with reduced execution risk compared to internal transformations. He criticized Tabcorp's current technology, which consists of a mix of outdated on-premises and cloud infrastructures amid various third-party services.
He remarked, "The cost synergies will be delivered with BetMakers much faster and cheaper than we would be able to do ourselves, and that’s borne out of some detailed analysis of the alternative options as well."
CFO Mark Howell added that this acquisition provided the most cost-effective and least risky solution available to modernize their technology stack.
As a part of the acquisition agreement, Tabcorp intends to utilize BetMakers’ technology and distribution networks to create a comprehensive offering that includes racing media, data, wagering technologies, and tote services aimed at international markets. BetMakers’ racing data will be integrated into Tabcorp's Sky Racing media platform, thereby enhancing data analysis capabilities, according to McLachlan.
He said, "Ultimately, what we’re talking about is having a full suite of vision, data, technology, and wagering services, having them end-to-end and distributed to every significant territory in the world. BetMakers has complementary assets, and the timing and exact opportunity in each market will differ."
Fraser pointed out that a significant strength of BetMakers lies in its customer intelligence and media capabilities, which align with Tabcorp’s goals.
In terms of team structure, Tabcorp's leadership noted the priority will be on retaining key BetMakers executives as they integrate the two firms. However, the internal team that will spearhead the new technology arm will primarily comprise new personnel. Fraser will oversee this new technology team.
McLachlan indicated that the team’s structure is clear and targets have been set, assuring stakeholders of a streamlined integration process. He mentioned that many team members involved in the integration will have previously worked on Tabcorp’s demerger, bringing essential knowledge of the systems involved.
The addition of talent from BetMakers, especially those with expertise in artificial intelligence, is welcomed by McLachlan. He is confident in their digital transformation capabilities: "They’re proven in digital transformation and we’ll harness that capability. Their focus on being lean and efficient and fast aligns with the culture that we are building at Tabcorp."
