What now for Tabcorp, Tatts merger?

What now for Tabcorp, Tatts merger?

Monday, November 16, 2015
Some experts believe that a deal could still take place

A fall in Tabcorp’s share price has derailed merger talks between the gaming operator and its Australian rival Tatts Group.

The two companies said earlier today that discussions over a deal that would have created a Aus$9.4bn (€6.2bn/US$6.7bn) combined entity have ended.

Tabcorp is valued at Aus$3.7 billion and runs pool betting in Victoria and New South Wales, while Tatts boasts a market value of Aus$5.7 billion and runs the tote in Queensland, South Australia and the Northern Territory.

While Aus$100m in synergies had been identified, Tatts said in its statement that there had been disagreement on “a nil-premium exchange ratio”.

Tabcorp said the two companies "were unable to mutually agree acceptable terms and those discussions have ended. There are no further discussions taking place between the parties relating to a merger or any other form of corporate transaction”.

A sell-off in Tabcorp shares following a trading update on October 29 was a major impediment to the deal proceeding since Tabcorp shares have declined more than 10 per cent since. By comparison, Tatts said first-quarter trading "had a solid start" with both lotteries and wagering performing well.

Market strategist Evan Lucas told the Australian Associated Press agency that the deal should not be considered dead as the companies would benefit from greater resources as they seek to cope with the threat of international giants such as William Hill and Ladbrokes.

“Seeing a Aus$9.4bn company that can take them on is probably not a bad idea, so it's definitely not off the cards," Lucas said.

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