Tatts acquires NSW Lotteries for us$ 763 million

Tatts will pay a total of us$ 763 million for the lottery business of Australian most populous state, adding to its existing portfolio of lottery businesses in Queensland, Victoria, Tasmania, Northern Territory and the Australian Capital Territory (ACT).

Tatts said that the acquisition will be funded with existing cash and debt provided through an increase and extension of existing corporate facilities, with the acquisition expected to produce an additional us$ 107 million of EBITDA by 2014.

Tatts Chief Executive Dick McIlwain said the NSW Lotteries acquisition offered considerable value to the company by creating the opportunity to repeat the success it achieved when it bought Queensland’s Golden Casket for us$ 486 million in 2007 on similar transaction multiples. That acquisition resulted in Tatts Lotteries’ EBITDA increasing from us$ 31.4 million in 2007 to us$ 106.8 million last financial year.

New South Wales Treasurer Eric Roozendaal said the sale represented a great outcome for the families and taxpayers of NSW. In addition to the us$ 763 million payable by Tatts, NSW Lotteries will also transfer us$ 143.6 million in cash and assets to the state government prior to completion of the sale.

“That means total proceeds of the sale of NSW Lotteries for NSW taxpayers of more than us$ 898 million – money that will go straight back into funding frontline services for the families of NSW like teachers, police and nurses, and strengthening the state’s balance sheet,” said Roozendaal.

Roozendaal added that the transaction not only removed the inherent conflict of the Government as owner and regulator of NSW Lotteries, but unlocked substantial funds that can be redirected to frontline services like police, teachers and nurses.

In addition to the sale proceeds, taxpayers will also continue to benefit from the ongoing payment of duties from the sale of lotteries products, which totalled approximately us$ 296 million last year.