Tabcorp and Tatts Group agree £7bn merger
Deal between Australian giants will enable enlarged firm to compete more effectively against foreign rivals
Tabcorp and Tatts Group will combine to create a new Australian AU$11.3bn (£7.1bn) gambling powerhouse, with the deal driven by the desire to compete more effectively with digitally-focused foreign bookmakers.
The merger is expected to complete in mid-2017, subject to shareholder and regulatory approval, with current Tabcorp chief executive, David Attenborough, set to take the reins as CEO and managing director.
The combined firm, which is expected to deliver at least $130m (£81.2m) per annum in synergies and business improvements, will have a market cap of approximately $8.6bn (£5.4bn), revenue of more than $5bn (£3.1bn) and EBITDA of over $1bn (£0.6bn).
Existing Tabcorp shareholders will own approximately 42% of the combined company and Tatts shareholder 58%.
Following completion of the deal, the firm’s wagering brand portfolio will include UBET, TAB, Luxbet and Tabcorp’s recently-launched UK-facing Sun Bets product.
“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,” Tabcorp’s chairman, Paul Dwyer, said.
“This transaction is expected to deliver significant value for both sets of shareholders, and material benefits to other key stakeholders including the racing industry, business partners, customers and governments,” Dwyer added.
Tabcorp and Tatts claimed the merger would lead to an extra $50m per annum in additional funding to the Australian racing industry via larger wagering pools.
Both operators have faced increased competition in the Australian market in recent years following an influx of European gambling giants including bet365, Paddy Power Betfair, Ladbrokes and William Hill.
And speaking to EGR this morning, a senior source at one foreign operator claimed the merger would make it more difficult for the rest to survive in the market, particularly for those which currently attract less than $5bn in staking per annum.
News of the deal has seen Tabcorp’s share price increase 3.48% to $5.06, while Tatts Group’s was also up 15.88% to $4.16.