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Shares in the newly minted $11 billion Tabcorp to start trading

The long-anticipated merger between Tatts Group Limited (ASX: TTS) and Tabcorp Holdings Limited (ASX: TAH) has entered its final stages with the new $11 billion company set to commence trading on the ASX today.

The Supreme Court of Victoria finally approved the $6.15 billion takeover that has been on the cards for more than a decade.

The combination of the two companies “creates a world-class, diversified gambling entertainment group, with a large national footprint and a diverse suite of product offerings across wagering, media, lotteries” and other gaming services, according to Tabcorp.

The two companies had been making moves to merge since 2006 and Tatts shareholders voted overwhelmingly in favour of the scheme on Tuesday with Court approval following on Wednesday.

New Tabcorp shares are expected to commence trading on the ASX on a deferred settlement basis today.

The combined company is expected to have annual revenues of more than $5 billion and enjoy standing as an ASX50 company.

The merger hit numerous stumbling blocks along the way and was recently held up by opposition from CrownBet Pty Ltd, a joint venture with Crown Resorts Ltd (ASX: CWN).

But, shortly before the last hurdles to the merger were overcome, Tabcorp announced that it entered into an agreement with Crown whereby Crown would discontinue its attempts to block the merger via legal avenues.

Tabcorp wasn’t the only company expressing interest in Tatts.

Last year Tatts rejected an offer from the Pacific Consortium, led by Macquarie Group Ltd (ASX: MQG).

Tatts had lifted its market value by more than $2.5 billion in the past five years to $6.87 billion before trading in the company was this week suspended.

With Tabcorp’s market cap of about $4.45 billion, the combined company will be worth more than $11 billion.

Integration of the businesses is expected to take approximately two years, according to Tatts.

The net one-off integration costs and capital expenditure, excluding transaction costs associated with the scheme, are expected to come to approximately $141 million.

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Returns as of 6th October 2020

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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