Yesterday, shares in Betmakers Technology Group (ASX: BET) were placed in a trading halt pending the release of an announcement.
Since reaching highs of $1.65 last month, Betmakers’ shares have tumbled around 35% after announcing its proposal to acquire the wagering arm of Tabcorp Holdings Limited (ASX: TAH).
BET share price
Why were shares halted?
Betmakers told the market that shares had been halted pending an announcement regarding the completion of a material acquisition. Not too much more information was provided, so investors will have to wait to find out what acquisition the company is referring to.
Some could guess Betmakers could be referring to the recent proposal for a part of Tabcorp’s business, but the announcement did say the completion of an acquisition.
As far as we know, the proposal wasn’t accepted, so I think it’s unlikely that it’s referencing this proposed deal.
Sportech?
Betmakers could be announcing the completion of its recent Sportech acquisition, although I wouldn’t have thought shares would need to be halted given that the market was already aware of the details.
Betmakers completed a $50 million capital raising last year to acquire the assets of the UK-based sports betting company. Sportech provides betting software, hardware and other solutions to more than 150 clients in over 30 countries.
According to BetMakers CEO Todd Buckingham, the acquisition represents an opportunity for the company to expand its product suite by offering a full spectrum of digital and retail betting solutions across multiple licenced jurisdictions.
Summary
Management has previously flagged the opportunity for more acquisitions, so I wouldn’t be surprised if something was announced that the market was previously unaware of.
Betmakers is an interesting business that’s gone through some extreme volatility on the back of the Tabcorp proposal that wasn’t received too well by the market.
The size of the proposed transaction was, quite frankly huge, relative to the size of the Betmakers business alone. With a market cap of $877 million, Betmakers was proposing to fund the acquisition through $3 billion of new shares and $1 billion in cash financed through debt.
Additionally, the wagering arm of Tabcorp has been underperforming as other bookmakers such as Sportsbet have been winning market share as fixed-odds racing has surged in popularity while tote betting has fallen out of favour.
For more reading on this, click here to read: Was the Betmakers (ASX: BET) sell-off justified?
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