Australia’s TABCORP has shelved plans to spin off its casino business to increase its valuation and attract takeover bids, amid fears the turmoil on the share markets and the high cost of debt will hinder a competitive auction.

The board was reported to have been briefedby its investment banking adviser, UBS, several weeks ago about a proposal to split Tabcorp into separate casino and gaming-wagering companies, but has been left unimpressed.

The demerger was suggested as a way to lift the market value of its casinos, including Sydney’s Star City, by distancing them from Tabcorp’s challenged poker machines and wagering operations. A focused casino business, valued at more than $4 billion, would also be more attractive for takeover offers from possible suitors like James Packer’s Crown, the argument went. But with share markets posting their worst performance in 26 years and the cost of debt making large deals prohibitive, sources close to Tabcorp said the move could have left the company with Mr Packer as the only likely bidder. He has long coveted its Sydney casino.

link