some discussion they might put all the lotteries business...

some discussion they might put all the lotteries business together & spin those out for a seperate float which might mean wrapping up Jin in that plan. Early days but will be interesting to see how this plays out.

Cheers
Hot legs
Tabcorp set to pay control premium for Tatts Group
Edited by Sarah Thompson, Anthony Macdonald and Joyce Moullakis


October 18, 2016, 8:52pm

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Tabcorp CEO David Attenborough is expected to have some big news for shareholders on Wednesday. Josh Robenstone
Tabcorp will present Tatts Group shareholders with a scrip and cash takeover bid on Wednesday morning, proposing to take full control of the wagering and lotteries company.

Street Talk understands Tabcorp and Tatts have done away with the previously proposed merger of equals deal structure - which failed to satisfy both camps - and Tabcorp will offer a control premium for all of the shares in Tatts.

Tabcorp's offer is expected to be endorsed by Tatts' board and a number of the company's key shareholders. The offer will be heavily scrip-based, with a small cash component which is likely to see Tatts' $100 million-odd in franking credits returned to its existing investors.

It is understood the takeover, to be done via a scheme of arrangement, was endorsed by both companies' boards during meetings on Tuesday. The offer will require approval from 75 per cent of Tatts' voting shareholders, with a scheme meeting likely to be scheduled for early in the new year.

Tabcorp's move to pay for control of Tatts - rather than pursue a messy merger of equals - also means the two sides did not have to spend any time sorting out the "social" issues associated with a merger of equals. There is no question who will be the company's chairman, chief executive, CFO or the like, with UBS-advised Tabcorp set to pay for the right to retain all such titles.

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Goldman Sachs-advised Tatts' wagering and lotteries businesses would fold into Tabcorp.

Should the deal be successful, it would create a $4.5 billion a year wagering company with earnings before interest, tax, depreciation and amortisation of about $1 billion. The market is likely to value the combined entity at close to $10 billion, with analysts expected to factor in about $100 million a year in synergies.

Regulatory approval will be a key hurdle. No wagering deals happen quickly given the numerous industry and government stakeholders involved, with the Australian Competition and Consumer Commission also to take a close look.

It's understood Tabcorp approached Tatts with the revised deal structure in recent weeks. The two companies' shares went into a trading halt on Tuesday morning as revealed by Street Talk, as the boards and their key dealmakers went about finding a price acceptable to both sides.

It seems like one of those deals where a bit of shouting was required before the two camps were happy. In the end, both sets of directors will tell investors they have secured a good outcome.