Investment Matters

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.

Key points:

  • 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.

     -     abc.net.au

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.

Crown Resorts 

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.

Elsewhere

None of the Twenty Leaders rose or fell by more than 3% over the week.  Yawn.