Tatts and Tabcorp Back in Merger Talks
Australia’s two leading wagering companies, Tatts and Tabcorp, have confirmed that they have resumed merger talks with the potential to create a $10 billion gambling giant.
The two companies requested a trading halt on the Australian Securities Exchange (ASX) on Tuesday in order to pursue discussions. The trading halt will remain in place until the beginning of trading on Wednesday morning.
“The trading halt is requested pending the outcome of discussions in relation to a potential change of control transaction pursuant to a scheme of arrangement that is under consideration by Tabcorp,” read a statement by Tabcorp to the Australian Securities Exchange.
Tattersalls is worth approximately $5.3 billion. It runs totaliser betting in the Northern Territory, Queensland, South Australia and Tasmania and operates the major lottery businesses in the eastern states. It also operates the online betting company, UBET, which it launched last year.
Tabcorp, worth approximately $4 billion, operates the tote in the ACT, New South Wales and Victoria, as well as the media branch of Sky Racing. Tabcorp operates the online gaming Luxbet brand.
The companies have been discussing the possibility of a merger for many years, including earlier this year, although those talks were put on hold while the Western Australian government considered a privatisation of TAB, which both Tatts and Tabcorp were expected to bid for.
Talks in 2006 also ended when the Australian Competition and Consumer Commission (ACCC) halted the discussions over competition concerns that were relevant at the time.
A successful merger is likely to create between $80 million and $100 million in synergies through the consolidation of IT platforms and administrative positions. It would also be likely that the companies would consolidate their Tatts headquarters in Brisbane and their Tabcorp headquarters in Melbourne, reducing headcount and other overheads.
March 27, 2017