Major merger for big gamblers
Gambling giants Tabcorp and Tatts are merging into an $11.3 billion giant in control of over 90 per cent of Australian betting.
The combined company is expected to generate revenues in excess of $5 billion.
Both companies’ board agreed unanimously to the deal that effectively gives Tabcorp control of the merged business.
Tatts shareholders will receive 0.8 Tabcorp shares plus 42.5 cents for each Tatts share they hold.
The deal still requires ACCC approval, but the regulator has expressed reservations in the past, and blocked a similar proposal in 2006.
ACCC chair Rod Sims is concerned about the overlap between the two companies.
“Our understanding is the proposed merger will require a public review that will examine a range of potential issues and areas of overlap, with the focus on various gaming and wagering services,” he said in a statement.
“The ACCC may also consider possible overlaps in other areas, such as systems for managing poker machines and lotteries/Keno.”
The merger has the support one of Tatts' largest shareholders, Australian Super.
The deal is expected to release $130 million per annum in synergies and business improvements, with a total benefit of around $1.4 billion.
The improvements should include removing overlapping IT platforms, merging head offices and cutting jobs.