Good morning,

Is Tabcorp vulnerable to a takeover? Yes, says top hedge fund trader Sujit Dey.

On Monday, Dey told his loyal followers the bookmaker is a sitting duck with its stock price trading near an all-time low (post the Lottery Corp-demerger) and urged them to buy, buy, buy.

The possible bidder: Ladbrokes operator Entain, who lobbed a $3.5 billion bid for Tabcorp in April 2021 and has been active in the M&A market since.

“Back then, Entain was willing to pay 7.2-times FY21 EBITDA and therefore I wonder whether it looks at Tabcorp again,” Dey wrote.

“[Tabcorp] still holds the no. 2 position in Australia and hence is strategic, in my view. I’d be buying the stock here as it is cheap on 5.8-times next twelve months EBITDA.”

This isn’t the first time Tabcorp has appeared on Dey’s M&A target list, having been named as a potential target in 2022.

Sources also told Street Talk the company has been inspected several times over the last few years, its observers tempted by the seemingly cheap headline multiple. However, they said the investment to make it a real force in digital would be huge, coming up against dominant and dynamic competitors.

Meanwhile, no one was surprised yesterday when the Reserve Bank held rates at 4.1 per cent – well almost no one. Stephen Anthony from Macroeconomics Advisory and Morgans’ Michael Knox were the only two of 42 economists surveyed by The Australian Financial Review last week who predicted a rate rise.

Being a contrarian can work in your favour, but this is strike two for the pair, who also tipped rates to rise in our June survey. The RBA has been on hold since July.

Happy reading,

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• Shaw and Partners names two new hires.
• Rentals business Clennett Hire seeks fresh funds; taps Lempriere Wells.

• Superloop eyes higher Symbio bid despite declaring “best and final”, writes Jenny Wiggins.
• Castlelake and Air France-KLM are set to become new major shareholders in Scandinavian airline SAS, Reuters reports.
• Brookfield Asset Management has raised $US12 billion for its largest ever private equity fund, according to Bloomberg.

The 2023 M&A league table is still all about the Newmont-Newcrest takeover. Banks involved in the deal – which has a mooted value of $26 billion-plus – dominated the top five spots, making it impossible for any outsiders to get close.

Click here for the latest equity market wrap.