In a strategic move designed to shore up its planned $8.18 billion merger with Tatts Group, Australian sportsbetting and gaming operator Tabcorp Holdings Limited has purchased a 10% stake in its Brisbane-based rival.
According to a report from Asia Gaming Brief, Tabcorp Holdings Limited agreed a cash-settled equity swap on Friday to give it voting rights over 147 million Tatts Group shares with an average reference price of $3.23 although the deal is not set to change the proposed post-merger capital structure.
“The transaction is intended to help facilitate the proposed combination of Tabcorp [Holdings Limited] and Tatts [Group] and provide shareholders with improved financial outcomes,” read a statement from Melbourne-based Tabcorp Holdings Limited. “The combination of Tabcorp [Holdings Limited] and Tatts [Group] is expected to deliver significant value for both sets of shareholders as well as material benefits to other shareholders including the racing industry, business partners, customers and governments.”
Institutional investments and brokerage firm CLSA reportedly explained that the acquisition provides Tabcorp Holdings Limited with voting rights over any Tatts Group shares it holds in connection with the equity swap and more has made it more likely that the planned merger will be approved by shareholders.
“It will now be more difficult for the merger to be voted down and/or for a third party to build a stake,” read a statement from CLSA. “This looks like a pre-emptive move rather than in response to an imminent bid or proposal.”
Tabcorp Holdings Limited and Tatts Group began merger discussions in November of 2015 and revealed last month that the expected union could now be complete by the middle of next year subject to the receipt of necessary regulatory approvals. Should these be obtained, the combined entity would be the biggest gambling company in Australia and provide stiff competition to established operators such as Ladbrokes, William Hill, Unibet and Bet365.