Two of the largest gambling companies on the Australian market, Tabcorp Holdings and Tatts Group, announced today they are to merge officially after a cumbersome merging process that was ridden with difficulties. The merger’s official announcement marks a new chapter in the two gambling operators’ history as their long-awaited partnership is to result in the creation of a massive gambling conglomerate that is roughly estimated to A$11 billion.
The newly-merged gambling giant Tabcorp-Tatts plans to become a force to be reckoned with in the industry and is to pursue further expansion on the international gambling market. Members of the Tabcorp governance announced on Friday they are looking for opportunities to expand their business into the US market should sports betting become regulated there.
David Attenborough, Chief Executive of Tabcorp, revealed on Friday his chief priority at the current moment is the smooth integration of the two gambling giants’ businesses and technology. This certainly is not an easy task considering both companies employ thousands of people across their lottery, wagering and gambling services divisions.
The Merger Plans Were Met with Strong Opposition
The path to sealing the deal on the merger between Tabcorp and Tatts Group was ridden with obstacles. The two Australian companies announced their intentions to combine back in October 2016. Right off the bat, the merger had its fair share of opponents who questioned the benefits the deal was expected to bring about. Rival operator CrownBet was among the most avid objectors to the possible Tabcorp-Tatts Group merger.
One of the strongest opponents of the partnership was the Australian Competition and Consumer Commission (ACCC). The regulatory authority argued that a potential deal between the two gambling behemoths is likely to have a negative impact on the local market and would hurt the operation of other Australian gambling companies.
The result was that the ACCC turned to the Australian Competition Tribunal (ACT) and demanded them to ban the Tabcorp-Tatts merger. This caused Tabcorp to appeal to the ACT and insist that the merger was the only way for the two stand-alone companies to remain competitive on the Australian market and stay in business.
ACT Gives the Green Light to the Merger
In June 2017, the Australian Competition Tribunal reconsidered its decision and gave the merger the go-ahead but there was one condition that had to be met before the deal between Tabcorp and Tatts Group was finalised. The Tribunal demanded that Tabcorp should first sell its Odyssey Gaming business.
However, the ACCC did not stop its attempts to prevent the finalisation of the deal amid concerns that it would hurt local competition. In July 2017, the Commission demanded a review of the Tribunal’s decision to approve the Tabcorp-Tatts Group merger and insisted that there were crucial errors there that needed fixing before the deal is officially sealed.
The errors in question had to do with the use of cost savings and synergy benefits. The ACCC proceeded to take the case with the merger to the Australian Federal Court insisting that these points should be made clear before the deal officially becomes a reality. The Federal Court sided with the Commission and ruled against the planned merger of the two betting giants in September 2017. This was a serious blow for the future partners and the merger came to a standstill for a while since it was sent back to the Australian Competition Tribunal for revaluation.
Another hearing of the merger was organised by the Tribunal, which once again gave the two companies its permission to proceed with their deal. The condition set forth by the Tribunal was again the same – Tabcorp was expected to sell Odyssey Gaming, which operated in Queensland. Last week, Tatts Group organised a meeting of its shareholders who also voted in favour of the proposed takeover offer.
Rival operator CrownBet was given till December 20 to appeal the decision of the Australian Competition Tribunal. The two contenders managed to come to an agreement after Tabcorp consented to allow the customers of CrownBet to use Tabcorp’s Sky Racing streaming services. This cleared the last hurdle for the two merging companies striking their deal.
What Follows Next for Tabcorp-Tatts?
With the merger being finalised today, the two companies will fulfil their plans to become one entity. The process of integrating the two businesses together is expected to take around two years, according to the Tabcorp’s Chief Executive David Attenborough. He also revealed that the operator’s bookmaking business UBET is to remain a separate brand until the full integration is completed. The customers of Tabcorp have nothing to worry about as no other material changes are to take place for the time being.
The merger of the two gambling giants will reportedly result in a massive cash flow to the amount of A$130 million. The revenue generated from the entity’s racing products is expected to contribute with a significant portion of that sum. Mr Attenborough explained there are numerous opportunities for the merged entity to grow, especially when one considers its strong balance sheet. The partners are now eyeing the US market and are hoping the US Supreme Court would rule in favour of lifting the ban on online sports betting outside the state of Nevada this next June.
- Author
Olivia Cole
