Tabcorp’s desire to create an $11 billion mega gaming group with Tatts Group is set to proceed and the combined company could already be setting its sights on an early acquisition.
The Australian Competition Tribunal will publish its decision today outlining the reasons why support was granted to the controversial deal, which was opposed by the ACCC, Racing Victoria and CrownBet.
The Pacific Consortium, led by Macquarie, KKR and First State Super, is seemingly out of the game now despite speculation over the past few days it could re-emerge.
Tabcorp’s share price closed at $4.59 yesterday, down nearly 0.7 per cent, while Tatt’s ended the session at $4.29. Under the offer, Tatt shareholders will be given 0.8 Tabcorp shares plus 42.5c per share.
The Tabcorp closing price last night valued the offer to Tatt’s at $4.09, well below the current market price and also the rival consortium’s $4.21 offer.
But the indications are that Pacific is not be tempted to re-enter the battle even though Macquarie and KKR are not afraid of a scrap.
The thinking is that given Tatts and its chairman Harry Boon would not entertain the twice-revised bid then the chance of success now with the ACT onside was even slimmer.
The time it would take for the consortium to get the range of regulatory approvals that its bid needed was a major factor in Tatts decision not to take part in talks. Some observers say it could have taken up to nine months.
The first scheme meeting for Tatts investors will be held in August, around the same time the Queensland-based company delivers full-year results. It’s thought the results could be below expectation, especially after Tabcorp downgraded its full-year outlook.
Tabcorp now expects its profit to be $173 million to $180m, 9 per cent below the market’s previous consensus of $192m. A JPMorgan analyst report yesterday said a key driver of the downgrade was expected negative growth in second half sports revenue.
Tatts 2017 results risk coming in below expectations, especially after Jumbo Interactive Group said in late May that its net profit would be down about 3 per cent.
Jumbo is the reseller of Tatts lotto tickets so analysts think the results of both companies are closely linked.
Jumbo also could be on the radar of the combined Tabcorp and Tatts once the companies are joined later this year.
Tatts owns 15 per cent of the company, which has a market capitalisation of just $128m, making it well within reach for the merged gaming group.
Focus is also starting to home in on the rest of the corporate bookmaking sector, especially William Hill, which has been growing its presence in Australia alongside Ladbrokes.
JIN Price at posting:
$2.50 Sentiment: Buy Disclosure: Held
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