Tabcorp Holdings Ltd. will buy Tatts Group Ltd. in a deal valued at .9 billion, the two major Australian gambling operators announced. The resulting company will dominate Australia’s non-casino market, taking bets on horse and greyhound racing and sports matches across the nation. Its wagering licenses will run to the end of this century in three states, including the most populous New South Wales. The companies, which together dominate more than two-thirds of Australia‘s .67 billion sports wagering market said the merger is expected to deliver at least million in annual savings.
One of Australia’s leading sports-betting operators, Tabcorp provides land-based gambling options across several states and has an online betting business. Last year, it emerged with UK’s News Corp, the publisher of the Sun tabloid, to launch a branded online betting company serving British bettors, now valued at $3.11 billion.
Tatts manages sports betting and gaming divisions, and a lottery operation that accounts for most of the company’s revenue. Its current value is $4.02 billion.
Australia has attracted foreign competitors such as Ladbrokes, Bet365 and William Hill thanks to the deregulation of gambling licenses in 2012, technological changes and increased interest in digital gambling products. The foreign companies offer highly competitive online sports betting products, making it difficult for both Tatts and Tabcorp to keep up. Their merger is expected to be a positive move against outside competition.
Tatts shareholders will receive the equivalent of $3.31 a share in cash and Tabcorp stock, 21 percent more than a recent Tatts’ last closing price, the companies said in a statement.
Evan Lucas, a market strategist at IG in Melbourne, said, “It had to happen to take on the foreign raiders. To merge to form a balance sheet with the synergies that would come from a deal like this makes complete sense.’’
Paul Skamvougeras, head of equities at Perpetual Ltd., Tatts’ biggest shareholder, added, “We are in favor of the deal, the synergies are material. The terms are particularly attractive for Tatts shareholders.”
Rod Sims, chairman of the Australian Competition and Consumer Commission, said the deal requires competition approval, and raises “major concerns.” Sims said “there’s a lot of overlap” between the two companies. But Tabcorp Chairman Paula Dwyer said, “Combining our two complementary businesses will give us a national footprint and could create a pathway to larger wagering pools. 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.”
