Tabcorp ordered to sell its pokies monitoring Odyssey Gaming business in Queensland

Tabcorp-Tatts USD 8.5B merger okayed by Australian Competition Tribunal

The AUD 11.3B ( USD 8.5B) deal will see the creation of a mega gaming business.
2017-06-21
Reading time 1:47 min
The AUD 11.3B ( USD 8.5B) deal will see the creation of a mega gaming business.

The decision handed down by ACT president Justice John Middleton placed only one condition on the merger, which was first floated in October last year.

Justice Middleton ordered Tabcorp must sell its pokies monitoring Odyssey Gaming business in Queensland.

Tabcorp had previously announced it would sell the Odyssey business to Australian Federal Hotels if the merger was approved.

Tabcorp took the unusual step of heading straight to an ACT determination after the Australian Competition and Consumer Commission flagged a number of concerns with the deal, including the market power of Tabcorp's broadcast arm.

"The tribunal is satisfied that the proposed merger is likely to result in substantial public benefits," Justice Middleton said in a statement accompanying the decision.

"[As] the public detriments identified by the ACCC and the interveners are unlikely to either arise or are not of significance, the tribunal is satisfied in all the circumstances that the proposed merger would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur," he said.

Tabcorp eyes the global market

The merged companies will control about 90 per cent of Australia's totaliser betting and will generate revenues in excess of $5 billion.

Tabcorp forecast the deal would release about $130 million a year in synergies by eliminating overlapping IT platforms, merging head offices and cutting jobs.

Tabcorp's chairwoman, Paula Dwyer, welcomed the decision saying it was an important step to creating a diversified gambling entertainment group capable of competing on a global stage.

"[It] 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," she said.

"The combination will bring together two great Australian businesses, well positioned to invest, innovate and compete in a global gambling entertainment marketplace."
The merger deal is expected to be put to both sets of shareholders for approval in August.

The ACCC declined to comment until the reasons for the ACT's decision are made public later this week.

"[However, the ACCC] notes that the net public benefit test the Tribunal was required to apply is different to the substantial lessening of competition test the ACCC undertakes in its informal merger clearance process," an ACCC spokeswoman said in a brief statement.

Tatts jumped 3.6 per cent to $4.32 on the news, while the response was more muted for Tabcorp, up 0.4 per cent to $4.65 at the end of the day's trade.hly successful in the region.

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