Australia’s two largest gambling companies confirmed the rumors that there were talks to have the two merge. However, the two, Tabcorp Holdings Ltd. and Tatts Group Ltd failed to reach an agreement, leading to calling off the ongoing discussions.
Since 2012, when Tabcorp and Tatts had their gambling licenses deregulated, the companies’ earnings have steadily been dropping, leading to speculation of a merger between the two from gambling experts. Had the merger gone through, it would have resulted in a combined market capitalization of A$9.4 million.
Although the two are said to have been discussing a merger of equals, further reports indicate that Tabcorp was the acquiring party. As a result, Tabcorp shares would have been issued to Tatts shareholders. However, in a two week period, from 29th October, Tabcorp shares have dropped by more than 10%. Tatts shares remained flat over the same period, besides having experienced a sharp increase in its shares. This disparity is said to have caused the merger talks fall out.
Tabcorp revealed in a statement that the two groups did not reach mutually acceptable terms, leading to the cancelling of the merger talks. Tatts, on the other hand, stated that no further talks would be taking place at the moment. Had the merger gone through, the result would have been a synergy worth over A$100 million.
Apparently, the two companies were not having the talks for the first time. In 2006, similar talks took place, but the Australian Competition and Consumer Commission prevented the merger. In the current situation, it turns out that it would have been possible to complete the merger, bearing in mind that there has been a significant change in the Australian competitive landscape. William Hill and Ladbrokes are among the major gambling operators who have joined the Australian market.
Tabcorp has their headquarters in Melbourne, Australia. Tabcorp is associated with providing leisure as well as entertainment services. The company is not only involved in gambling but other businesses as well. Besides operating casinos, the company also operates hotels and apartment complex, bars and restaurants, as well as theaters.
Tabcorp also has interests in the media industry, operating three Pay TV channels and a radio station as well. The broadcast stations are exported to 14 million users in the UK and Irish markets. Sky Racing World covers more than 83,000 races annually. Over the years, Tabcorp has been involved in other acquisitions and mergers as well.
Tatts group operates three divisions. The company has its headquarters in Woolloongabba, Australia, and was founded in 1881. Together with its subsidiaries, Tatts Group Limited has a near monopoly in the lotteries sector in Australia. Besides this domination, the company also operates in the United Kingdom as well.
Tatts group is involved in electronic gaming, operating gaming machines and providing services as well. The group comprises of three companies, ByteCraft, Maxgaming, and Talarius PLC. The company’s founder, George Adams structured the company in a way to enable the families of its original workers to inherit the profits. Since then, a share of the company’s profits has been inherited by subsequent generations.