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

3 min read | May 24, 2022 01:18 PM AEST | By Sukriti Nair

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What made Tabcorp’s (ASX:TAH) share price collapse 80%? — Image source: © Blueximages | Megapixl.com

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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.

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