What made Tabcorp’s (ASX:TAH) share price collapse 80%?

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Highlights

  • Tabcorp's share price dropped over 80% on the ASX today.
  • The entertainment business has completed the demerger of its lottery business.

Shares price of Tabcorp Holdings Ltd (ASX:TAH) plunged within an hour of trade on ASX today (24 May). TAH shares were down over 80.992% to trade at AU$1.015 apiece by 11:14 AM AEST. The gaming and entertainment business grabbed attention on the exchange because of the demerger of its lottery and Keno businesses.    

Tabcorp completes demerger of Lottery Corporation

  • Tabcorp Holdings Limited announced the 'coming into effect' of its scheme of arrangement for the demerger of its lottery business.
  • The Lottery Corporation Limited has become a demerged entity, and the demerger booklet is made available to shareholders.
  • While the demerger is expected to be implemented on 1 June 2022, the securities of the new entity -Lottery Corporation- are to commence trading from today under the ASX code 'TLC'.
  • However, the TLC shares will be traded initially on a deferred settlement basis.

What is changing on the ASX200 index from Tabcorp’s demerger?

  • As per an ASX announcement on last Tuesday by Tabcorp Holdings Ltd, S&P Dow Jones Indices are to add 'The Lottery Corporation Limited' to the ASX200 Index.
  • The change in the popular Australian index is because of the spin-off agreement under which Tabcorp.
  • Holdings Limited is demerging with The Lottery Corporation Limited to list it as a separate entity on the exchange.
  • Under the Tabcorp spin-off, one share of The Lottery Corporation Limited will be received by shareholders for every 1 Tabcorp share held.
  • Effectively there will be no removal from the ASX 200 Index but rather an inclusion of a new Lottery business.

 More from Consumer stocks- Why is Qantas (ASX:QAN) making headlines today?

Share price performance of Tabcorp and Lottery corporation

While Tabcorp holds a market capitalisation of AU$11.88 billion on the ASX, its share price has come down sharply. TAH's share price is quite close to its 52-week low of AU$0.930 a share. Tabcorp's share price has remained quite stable in the last thirty days of trade on ASX. However, a major dip today has made shareholders lose AU$4.36 a share. As per the ASX website, this morning, the trading volume of TAH shares was over 63 million, in a bid-ask range of AU$1.010 to 1.015 a share.

Its PE ratio today post demerger is 46.57. On the other hand, The Lottery Corporation Limited's share price is in the green, at AU$4.590 a share on its first day of trade on ASX. TLC shares are quoted in the daily price range of AU$4.49 to 4.69 apiece.

While Tabcorp's securities on ASX are fully paid ordinary shares, The Lottery Corporation, is listed with ordinary fully paid deferred settlement instruments.

More from ASX- ASX 200 Edges Lower In Opening Trade; Tabcorp, Nufarm Lead Losses


 


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