British sportsbetting and gaming operator Ladbrokes Coral Group is reportedly planning to launch a bid for Australian rival Tabcorp Holdings Limited in a deal that could cost the London-based firm in excess of $2.48 billion.

According to a story from The Australian newspaper citing a report in The Mail On Sunday, Ladbrokes Coral Group, which only completed its own $2.98 billion merger a few weeks ago, has hired advisers for the planned cash-and-script offer although a definitive offer is not thought to be immediately imminent.

Tabcorp Holdings Limited, which has a reported market capitalization of around $3 billion, operates Australia-facing brands including Sky Racing and Tab.com while having experience in the United Kingdom thanks to a partnership with The Sun newspaper. Any such offer from Ladbrokes Coral Group could threaten its own planned $4.71 billion merger with local sportsbetting and gaming firm Tatts Group and would face numerous hurdles including approval from the independent Foreign Investment Review Board.

“Hurdles to a merger other than price and deal structure include [Foreign Investment Review Board] (unlikely), racing industry approvals (difficult, not insurmountable) and government probity and approvals (should be okay),” read a note from Sacha Krien, an analyst with institutional investments and brokerage firm CLSA.

In a strategic move designed to shore up its hoped-for merger with Tatts Group, last week saw Melbourne-based Tabcorp Holdings Limited purchase a 10% stake in Tatts Group via a cash-settled equity swap. CLSA reportedly explained that this acquisition provides Tabcorp Holdings Limited with voting rights over any shares it holds in its Brisbane-based rival and has made it more likely that the planned union will be approved by shareholders.

“The Tabcorp [Holdings Limited]/Tatts [Group] situation just got interesting on the weekend,” read a note to investors from Citi analysts cited by The Australian. “We think this would be a relatively difficult bite for Ladbrokes [Coral Group] given the size of the deal; Tabcorp [Holdings Limited’s] market cap of $3.9 billion versus Labrokes [Coral Group’s] $2.98 billion and given Ladbrokes [Coral Group] only just closed on the purchase of United Kingdom gaming company Gala Coral. The likely rationale for such a move for Ladbrokes [Coral Group] reflects the current difficult operating environment in the United Kingdom whereby its gaming machine operations are facing the prospect of further tax hikes and wagering environment remains highly competitive and is currently undergoing a consolidation phase.”

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