Two of Australia’s biggest listed gambling businesses, Tabcorp and Tatts, have agreed to merge and create an $11.3 billion giant which will control more than 90 per cent of Australia’s totalisator betting and generate revenues of more than $5 billion.
The companies’ combined market capitalisation will be around $8.6 billion.
Boards of both companies unanimously agreed to the scrip and cash deal which will effectively give Tabcorp control of the merged business.
Tatts shareholders will receive 0.8 Tabcorp shares plus 42.5 cents for each Tatts share they hold.
However, the deal still needs approval from the Australian Competition and Consumer Commission (ACCC) which has expressed reservations in the past, including blocking a similar proposal in 2006.
The rapid growth of online betting and the influx of offshore gambling operations is one factor that has changed since the original merger plan was scuttled a decade ago.
However, ACCC chairman Rod Sims told an investment conference in Sydney yesterday he was concerned about the overlap between the two companies.
Mr Sims said a key consideration would be whether online betting would provide sufficient completion to constrain the merged business.
Together the merged entity would control totalisator betting in every state and territory except Western Australia.
It would also likely to be a clear favourite to take over the WA tote, if the Government there proceeds with plans to privatise the business.
The merged business would also run the biggest suite of lotteries.
After details of the planned merger were made public this morning, the ACCC said it will be undertaking a comprehensive review of the planned deal.
“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,” the competition watchdog said in a statement.
“The ACCC may also consider possible overlaps in other areas, such as systems for managing poker machines and lotteries/Keno.”