Australian gambling giants Tabcorp Holdings Ltd and Tatts Group Ltd yesterday announced a merger to create an A$8.6 billion (US$6.6 billion) powerhouse taking bets on horse racing and sports events across the nation.
The listed firms, who have pursued the idea of closer ties for years, said the move would significantly cut costs and allow them to chase opportunities globally.
“Combining our two complementary businesses will give us a national footprint and could create a pathway to larger wagering pools,” Tabcorp chairman Paula Dwyer said in a statement. “In today’s rapidly changing landscape, bringing together our businesses will create a strong and diversified business that is well placed to invest, innovate and compete, both in Australia and globally.”
Photo: AFP
Investors welcomed the move, with Tatts shares soaring A$0.57, or 15.9 percent, to close at A$4.16, while Tabcorp jumped A$0.17, or 3.5 percent, to A$5.06.
Tatts Group has a betting shop network in the states of Queensland, South Australia and Tasmania and also operates a lotteries business. Tabcorp Holdings runs similar operations in Victoria and New South Wales, and has a broadcasting and media arm built around Sky Racing.
Both companies also compete in online wagering.
According to the deal, Tatts shareholders are to receive 0.8 Tabcorp shares plus A$0.425 cash for each share they hold, giving Tatts an implied value of A$4.34 per share — a 20.8 percent premium on its share price before the announcement. The new entity is then to launch a A$500 million share buyback on completion of the merger, which is expected by the middle of next year, and subject to regulatory and shareholder approval.
Once done, Tabcorp investors are to own 42 percent and Tatts investors 58 percent of a combined group with a market capitalization of A$8.6 billion and an enterprise value of A$11.3 billion.
“The combination of Tabcorp and Tatts is based on clear industrial logic and a strong and tangible synergy proposition,” Tatts chairman Harry Boon said. “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.”
Tabcorp chief executive David Attenborough is to run the new company, with Dwyer as chairman.
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