Tue, Oct 18, 11:08am by Staff Writer
Australia’s gambling and wagering landscape could be set for a massive shake-up with Tatts and Tabcorp reportedly revisiting merger discussions which were first held last year.
A possible merger of the two massive gambling companies has been mooted since they had brief talks over a proposed $10 billion merger last year.
Those discussions fell apart over a failure to agree on a merger ratio, with Tatts feeling its lottery business was undervalued by anything which approached a ‘merger of equals’.
But the Australian Financial Review’s Street Talk column has reported that discussions are back on, with valuations being conducted by the respective parties.
Both boards are in discussions, although the details of any merger are yet to be formally work through.
It was reported that Tatts may look to spin off its lottery business before seeking any merger with Tabcorp.
Any merger would have a huge impact across the gambling industry, particularly in the retail betting market. Tatts own the totalisator licences for Queensland, SA and Tasmania, while Tabcorp controls New South Wales and Victoria.
The WA TAB is currently in the process of being sold by the state government, although that deal has been protracted.
Tabcorp’s status as Australia’s biggest betting operator is under concerted challenge from the influx of corporate bookmakers from overseas, including Bet 365, Ladbrokes, William Hill and Sportsbet, who are owned by Paddy Power.
The immediate upshot of a Tatts/Tabcorp merger for investors would be the synergies created, which were estimated to be worth around $100 million when the deal was first mooted last year.
But in a complex and competitive market, the merger of the two domestic powerhouses would enable them to best compete against the influx of overseas bookmakers.
Any merger would require the approval of the competition regulator.
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