Tabcorp Holding Limited announced a demerger of its 4. 3 billion casino and wagering business into two separate commercial entities: Echo and New Tabcorp. The term ‘New Tabcorp’ in this report refers to Tabcorp Holdings Limited after demerger and ‘Old Tabcorp’ refers to Tabcorp Holdings Limited before demerger. The report offers evidences to prove that the Old Tabcorp was suffering a conglomerate discount and the demerger has a positive outcome. The first part gives a brief introduction of Tabcorp, including the background and demerger movements.
The second part begins with a PEST analysis of the gambling industry in Australia which aims at drawing an image of the gambling industry environment. This part also contains financial analysis of the three entities, Old Tabcorp, New Tabcorp and Echo, and describes the financial performance and position and the valuation process. An industry consolidation analysis, as well as a synergy analysis, is given then. Finally, a conclusion is reached that demerger is an intelligent decision and will bring benefits to both shareholders and debtors of new entities.
Introduction Tabcorp Background Tabcorp Holding Limited (TAH) is one of the top gambling and entertainment enterprises in Australia, which was incorporated with the privatization of the Victorian TAB in 1994. Nowadays Tabcorp group offers more diversified gambling and entertainment products, including wagering, media and international, gaming and keno across the whole Australia. The details of its divisions are listed in Table 1. Table 1 Divisions of Tabcorp Divisions Descriptions
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<b>Overview of topic and issues discussed</b>Gambling in any form has been controversial since before history could document it. There are sections of the Bible that forbid gambling in any form. Gambling is legal in parts of the United States such as in Las Vegas Nevada, Atlantic City on the East coast and on various Indian Tribal grounds spread widely across the rest of the United ...
With respect to successful initial openings in 2011, The Star is expected to have successive openings over the course of 2012. Significant new products will be opened, and key mass market visitation drivers are still expected to come. Therefore it is expected that these excellent performances would be maintained throughout the whole financial year, which will push the group revenue growth up to 15% in 2012. The Group’s ASX announcement of half year results states that the Star’s redevelopment and expansion is going to be completed in 2012, thus it can be deferred that the Star won’t experience significant revenue growth after 2012.
In addition, the domestic business of QLD is impacted by a tough consumer environment, the domestic revenues are largely dragged by non-gaming softness, which is partly due to the theatre redevelopment in Golden Coast, and this negative effect is expected to continue. Thus it is expected that from 2013 the growth rate of the group revenue will gradually decline, and in 2015 reach at approximately 8%, which is the average revenue growth rate of Crown Limited in recent five years. Here Crown Limited is regarded as a peer company comparable to Echo since they have quite similar operating businesses in Casino Industry and similar customer base. . 2. 3 Financial Performance & position on Post-demerger Tabcorp Holdings Limited The new Tabcorp after demerger comprises four continuing businesses: Wagering, Media & international, Victorian gaming and Keno. Media & International was created as a separate operating segment at 30 June 2011. Previously Media & International was included in the Wagering operating segment. With respect to ASX announcement of Tabcorp 2012 half year results, the new Victorian Wagering and Betting Licence was issued on December 2011 to replace the old one, which will expire in August 2012.
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APPLE 2002 CASE ANALYSIS STUDENT NUMBER 899 Executive Summary Apple began with the mission to "change the world through technology." More specifically, the company sought out to make the personal computer an accessible and affordable device to the mass market. The proliferation of new software and hardware technology drastically changed the landscape of the industry and Apple adopted a ...
The Licence period is 12 years and will commence in August 2012. Therefore the negative influence of the expiry of previous Victorian Wagering and Betting Licence will be eliminated. The 2011 post demerger revenue decreased approximately 30% compared to 2010 pre-demerger revenue; however the continuing businesses demonstrate steady growth. The trading revenue for first half year of 2012 is 1573. 5 million, assume the performance will maintain in the second half year, compared to the revenue of 2947. 5 million in 2011 the revenue will experience a growth about 7% in 2012.
Look into Tatts Group Limited, which can be regarded as a peer company to new Tabcorp as they have similar company structure and operating businesses, its average revenue growth rate is nearly 8% in recent years. As there are no further expiring licences in recent years, and the businesses are stable, it is expected in the following four years the revenue will maintain a steady growth rate at about 8%. The new licence fee and associated costs totalling $418 million have been recognised as a non-current asset (Intangible assets – licences) at 31 December 2011.