Tabcorp Tatts merger approved

The Australian Competition Tribunal (ACT) has given the green light to the Tabcorp Holdings and Tatts Group proposed merger, authorizing a merged business that will be worth A$11.3 billion.

“Tabcorp welcomes today’s decision by the Tribunal. It represents an important step towards creating a worldclass, diversified gambling entertainment group that is expected to deliver significant value for both sets of shareholders and material benefits to other key stakeholders including Australian racing industries, business partners, employees, customers and governments,” Paula Dwyer, Tabcorp Chairman, commented.

“The combination will bring together two great Australian businesses, well positioned to invest, innovate and compete in a global gambling entertainment marketplace.”

Despite objections from rival betting companies and major concerns expressed by the Australian Competition and Consumer Commission(ACCC), which Tabcorp subsequently bypassed with a direct application to the ACT, the ACT’s only condition of authorization is that of Tabcorp selling its gambling compliance business, Odyssey Gaming Services.

“The Tribunal stated it is satisfied that the Transaction is likely to result in substantial public benefits and that the public detriments identified by the ACCC and the interveners are unlikely to either arise or are not of significance,” a TabCorp statement reads.

Tabcorp expects the merger to deliver at least A$130 million per annum of EBITDA within the first full year of integration derived from synergies and business improvements.

Completion of the deal is expected within August 2017.

In related news, Tabcorp reported its latest results in an Industry Update for the 11 months to May 31, 2017 and forecast results for June 2017.

The company expects to report Full Year 2017 revenue in the range of A$2.220 million and A$2,240 million, with EBITDA of between A$500 million and A$510 million.

EBIT of between A$320 million to A$330 million is expected and NPAT of between A$173 million and $180 million.

Total group revenue growth is estimated to be in the range of 1.4 percent to 2.3 percent.

The group revealed its Luxbet business will undergo a strategic review during Fiscal 2018 having recorded an EBITDA loss of A$8 million and an EBIT loss of A$13 million.

Other highlights include:

Tabcorp’s TAB business delivered turnover growth of around 1.6 percent and digital turnover growth of 14.2 percent;

Wagering and Media revenue growth of approximately 0.2 percent across all businesses, with growth of 1.4 percent excluding Luxbet and Trackside;

Total racing revenue growth of 0.9 percent with fixed odds racing growth of 21.3 percent continuing to offset the decline in totalisator revenue;

Total fixed odds revenue growth of 15.9 percent; and fixed odds yields for racing and sports are in line with the prior corresponding period.

Keno is forecast to report continued growth in FY17, having achieved turnover growth of 3.5 percent and revenue growth of 1.6 percent on the pcp in the 11 months to 31 May 2017.

Gaming Services is forecast to record strong growth in FY17, enhanced by Tabcorp’s acquisition of Intecq, having achieved revenue growth of 31.5 percent (and 7.8 percent excluding Intecq) on the pcp in the 11 months to 31 May 2017.

Tabcorp’s UK start-up online betting business Sun Bets is forecast to report a 2H17 EBITDA loss of A$24 million which the company said it will address with a range of initiatives it expects will significantly improve performance in fiscal 2018.

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