Both companies went into a trading halt this morning, “pending an announcement in relation to a potential change of control transaction…that is under consideration.”
In other words, both companies are considering a merger.
It’s not the first time the two have considered joining together.
Back in November 2015, the two companies called off discussions regarding a potential merger because they couldn’t agree on the terms.
Tatts runs totalisator betting in Queensland, South Australia, Tasmania and the Northern Territory as well as the lottery businesses in all states and territories except Western Australia. Tabcorp runs the TAB in Victoria, NSW and the ACT, Luxbet, Sky Racing, Keno alongside some other brands.
The biggest roadblock in the path of a merger is the Australian Competition and Consumer Commission (ACCC). Already ACCC chairman Rod Sims said the merger raises major concerns. Speaking at a conference in Sydney, Mr Sims said, “Clearly there’s a lot of overlap between what Tatts and Tabcorp do. So on the overlap issue, there’s major concern.”
Against that, the ACCC will need to consider the rise of online gaming and betting rivals. Several online-only players have entered into Australia and the Australian Wagering Council estimates there are 2,443 online casinos and gambling websites available to Australians – many illegal. The council’s members include Bet365, Betfair, Sportsbet and Unibet.
Other online sites include William Hill, Ladbrokes, Palmerbet and Crown Resorts Ltd’s (ASX: CWN) CrownBet, so there’s plenty of competition in several categories.
The ACCC is also interested in Tabcorp’s bid to takeover Intecq Ltd (ASX: ITQ) ex-eBet. Tabcorp is offering cash of $7.15 for each Intecq share, but the market doesn’t think it’s a done deal yet, with Intecq shares trading at a discount price of $6.98. Intecq handles poker machine monitoring in Queensland, and Tatts is reportedly in talks to buy Intralot’s Australian monitoring business, giving it control of NSW and Victoria.
It seems clear that this is a complex merger and could take some time to work through, including gaining approval from the ACCC.
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