Fri, Nov 25, 9:49am by Bren O'Brien
While the full merger of Australian gambling giants Tatts and Tabcorp is yet to receive regulatory approval, Tabcorp has moved to stave off any surprise takeover bids for Tatts from elsewhere by taking up a 10 per cent share.
Tabcorp entered into a cash-settled equity swap, securing 147 million shares in Tatts Group, or around 10 per cent of the company.
It is the first major share move since a merger between the two was announced in October. The merger intends to see Tatts shareholders receive 0.8 Tabcorp shares and 42.5¢ in cash for each Tatts share held, valuing Tatts shares at $4.34 per share.
The 10 per cent purchase on Friday was worth around $600 million and puts both companies in a position where it would be difficult for a third part to swoop in.
The deal was secured by Tabcorp’s banker UBS, offering $4.35 a share, a 42c premium on what the stock closed at on Thursday.
“The transaction is intended to help facilitate the proposed combination of Tabcorp and Tatts and provide shareholders with improved financial outcomes,” Tabcorp said in a statement.
“Tabcorp Holdings Limited (“Tabcorp”) has entered into a cash-settled equity swap with UBS AG Australia Branch in respect of up to approximately 147 million shares in Tatts, representing c.10% of the Tatts shares on issue.
“To hedge its exposure under the equity swap, UBS is seeking to purchase up to approximately 147 million Tatts shares.”
The process of the merger is expected to take around 12 months but would form an $11 billion gambling powerhouse which would have a virtual monopoly on retail wagering in Australia as well as substantial lotteries and sports betting businesses.
There are a range of other issues surrounding the prospect of a merger including concerns from Queensland that as many as 400 jobs could be lost from Tatts headquarters in Brisbane.
Current Tabcorp chairman Paula Dwyer is expected to also chair the new combined company, while Tabcorp CEO David Attenborough would head the operational structure.
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