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Category: Business, Economics and Finance / Gambling

Wagering giants Tatts and Tabcorp resume $10 billion merger talks

Tuesday, 18 Oct 2016 11:04:17 | Stephen Letts

After a decade of chatter, Tatts and Tabcorp finally appear to be advancing on a merger. (ABC TV)

Australia's two dominant listed wagering businesses Tatts and Tabcorp have confirmed they are back in talks to create a $10 billion merged outfit controlling totaliser betting in every state except Western Australia.

Key points:

  • Halt on trading as merger discussions continue between Tatts, Tabcorp
  • Two businesses would combine IT platforms, cut jobs to tune of $100 million
  • Tatts valued at $5.3 billion, Tabcorp at $4 billion

Both companies requested trading halts on the ASX this morning pending "the outcome of discussions in relation to a potential change of control transaction".

The two companies have pursued the idea of a merger for more than a decade, but talks appear to be further advanced than previous attempts.

Industry analysts said the long discussed deal would provide synergies of up to $100 million by combining IT platforms and cutting jobs.

Tattersalls has a market capitalisation of $5.3 billion and runs totalisator betting in Queensland, South Australia, Tasmania and the Northern Territory as well as the major eastern states lottery businesses.

Tabcorp — currently valued at $4 billion — runs the tote in Victoria, New South Wales and the ACT and has a media arm built around Sky Racing.

Both also compete in online betting; Tabcorp with its Luxbet brand and Tatts with the smaller UBET which was launched last year.

Earlier this year, talks of a merger appeared to be on hold pending a decision from the West Australian Government about the possible privatisation of its TAB agency, which both companies were likely to bid for.

An attempt at an all scrip, merger-of-equals transaction was scuppered late last year over squabbles about the relative valuations of the two companies.

An even earlier deal in 2006 was halted by the Australian Competition and Consumer Commission, although many of the ACCC's concerns were lessened by the Victorian Government's decision to restructure its industry two years later and extinguish existing gaming and wagering licences.

The rapid growth of global online betting products has also increased competition, although any deal would still face intense scrutiny from the ACCC.

AustraliaPlus


 

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