Merger may not be final till 2019
The controversial merger of Australian betting companies Tabcorp and Tatts Group has gotten the go-ahead from the Australian Competition Tribunal.
The merger was approved despite objections from rival betting companies who fear the resulting AU$11.3 billion juggernaut will hold too much power in the marketplace.
ACT agreed with Tabcorp and Tatts that the merger would have “substantial public benefits”; make the combined companies more competitive on a global level; and help combat the rise of online betting. Shares of both firms rose by about 5 percent on the announcement, reported BBC News.
The two companies—which both saw profits drop in 2016—operate sports betting clubs, state lotteries and pokies in a country known for its love of gambling. In fact, Australia has the world’s highest per capita gambling losses, says UK consultancy H2 Gambling Capital. It reported that Australians lose an average of US$1,130 a year to the pastime.
The Australian Competition and Consumer Commission opposed the merger, saying it had “major concerns” about the deal including the market clout of Tabcorp’s broadcast subsidiary. When the ACCC signaled its objection, Tabcorp took its plan straight to the tribunal.
Tabcorp Chairwoman Paula Dwyer said the company “welcomes the decision by the tribunal. It represents an important step towards creating a world-class, diversified gambling entertainment group that is expected to deliver significant value for both sets of shareholders and material benefits to other key stakeholders including Australian racing industries, business partners, employee, customers and governments.”
The deal must be approved by shareholders. According to the Asia Gaming Brief, a filing from Tabcorp to the Australian Stock Exchange estimates the merger will result in at least AU$50 million per year of additional funding to the Australian racing industry and AU$130 million of “annual EBITDA synergies and business improvements, net of benefits to the racing industry in the first full year of integration.”
It may take up to two years for the merger to be complete.
