Thu, Oct 20, 4:19pm by Bren O'Brien
The Australian Competition and Consumer Commission looms (ACCC) as the only obstacle to a $11.3 billion merger between gambling giants Tatts and Tabcorp after both boards approved the move on Tuesday.
Within 24 hours, ‘preliminary discussions’ have evolved to a full agreement with Tatts shareholders to receive 0.8 Tabcorp shares plus 42.5 cents for each Tatts share as part of the proposed deal.
The combined company would create control more than 90 per cent of Australia’s totalisator betting market and would be in the running to then secure the WA TAB, which is currently for sale, and take 100 per cent of that market.
While totalisator betting is on the decline, it still controls a massive chunk of the betting market and is a significant source of funding for the racing industry. It is estimated the merger would yield at least an extra $50 million for the industry.
Tabcorp and Tatts also have significant online wagering business, while Tabcorp owns media company Sky Racing, while Tatts has a huge lottery business.
Tatts chairman Harry Boon said the deal makes perfect sense in the current environment.
“It comes at a time of escalating competition from new business models and rapid consolidation of gaming and wagering companies globally. The scale and efficiency benefits from this combination will provide a stronger platform in this dynamic environment,” he said.
Tabcorp chairman Paula Dwyer said the merger would create a first-class wagering and gaming company which would create plenty of upside for customers as well as for the racing industry.
“In wagering, combining our two complementary businesses will give us a national footprint and could create a pathway to larger wagering pools. We are excited by this opportunity, which we believe will deliver an enhanced wagering experience for our customers and, in turn, will generate stronger returns to the Australian racing industry, underpinning its sustainability,” she said.
“At the same time, bringing together our lotteries, Keno and gaming services businesses will give us the capability to create an even more compelling offer for customers and retail stakeholders as the combination increases capability, while increasing diversification.”
The merger is expected to take around two years to complete and will generate revenues in excess of $5 billion.
After details of the planned merger were made public this morning, the ACCC said it will be undertaking a comprehensive review of the planned deal.
The ACCC appear the only thing standing in the way, as their approval will be required for it to progress.
“Our understanding is the proposed merger will require a public review that will examine a range of potential issues and areas of overlap, with the focus on various gaming and wagering services,” the competition watchdog said in a statement.
“The ACCC may also consider possible overlaps in other areas, such as systems for managing poker machines and lotteries/Keno.”
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