What mattered this week: new giant gambling machine
Tatts & Tabcorp
In an otherwise quiet week, the merger of gaming companies Tatts and Tabcorp was one of just two highlights:
Two of Australia's biggest listed gambling businesses, Tabcorp and Tatts, have agreed to merge and create an $11.3 billion giant which will control more than 90 per cent of Australia's totalisator betting and generate revenues in excess of $5 billion.
- Enterprise value of $11.3b for merged entity
- Tatts shareholders would receive 0.8 Tabcorp shares plus 42.5 cents for each Tatts share
- ACCC blocked merger between Tatts and Tabcorp in 2006 on competition worries
The companies' combined market capitalisation will be around $8.6 billion.
Shareholders in each company liked the idea. Tatts is up 14.6% over the week and Tabcorp up 2%. The merger may get the nod of the ACCC (which it didn't last time - 2006) because of the massive rise in on-line gambling.
Shares in the casino company associated with James Packer slid 17% over the week, as news of the arrest in China of 18 of its employees spooked the market. The arrests were seen to be a part of China's crackdown on the enticement of gamblers (and money launderers) to casinos in Macao (see Wry & Dry) and elsewhere.
None of the Twenty Leaders rose or fell by more than 3% over the week. Yawn.