In the time of mergers and acquisitions every other day bigger organisations are eying on the smaller ones to kill the competition. In addition to this there are other companies who are entering into mergers just to stay in the market and be able to withstand the bigger ones. In a similar move a famous gaming giant Tatts Group chief executive Robbie Cooke told investors that the $9 billion merger with rival Tabcorp will remain on the ice due to concerns that the competition regulator may take a dim view of combined entity bidding for Western Australia’s TAB network.
Mr Cooke and his counterpart at Tabcorp, David Attenborough, shelved the premium merger in November due to a last minute disagreement over valuations. However there are talks in the market that the deal could be revived due to narrowing of valuation gap. If this goes through than as per Deutsche analyst Mark Wilson estimated that Tabcorp could pay up to Au$4.75 per Tatts share for 100 percent of the company, or about Au$80 million in Synergies.
Tabcorp recently announced their plan that they are in talks to acquire gambling technology provider Intecq for US$128 million and this move will make this wagering operator strengthen its gaming services business. On the other hand Tatts is set to buy a local gaming monitoring operations of Intralot in a deal that could be worth between Au$90 million to Au$100 million.
Both the gambling operators as per the analysts are facing immense pressure from the growing number of the competition in the online corporate bookmaker market which in turn is also raising regulatory concerns. Even conflicting messages from politicians in the state and the failure to issue a request for proposal to this industry suggests any sale may not happen until the end of this year. This could effectively delay the merger between Tatts and Tabcorp out to 2017.
Wilson said to The Australian:
“While both Tabcorp and Tatts confirmed that no further discussions are taking place between the parties relating to a merger or any other form of corporate transaction, we believe Tabcorp will continue to assess the merits of a merger or the acquisition of Tatts’ wagering business.”
Tabcorp chief executive David Attenborough said:
“The online wagering sector is facing a list of regulatory issues, such as taxation, online betting on live sports as well as the level of sports betting advertising.”
