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British bookies move to pounce on Tatts’ wagering arm

Just when the potential Tabcorp and Tatts merger could not get anymore convoluted, a new twist in the saga emerged over the weekend.

British bookmaking giants William Hill and Ladbrokes are believed to be circling the wagering arm of Tatts Group as the Tabcorp deal to acquire Tatts hit a roadblock last week after another suitor tabled a bid for the lottery and wagering giant.

The bid, which was tabled by a consortium headed by the Macquarie group would trump Tabcorp’s original proposal by potentially 70c more per share.

A successful acquisition by the consortium would see the wagering and lottery sections of Tatts split, given the group has no intention of keeping the wagering side, which is where Ladbrokes or William Hill would come in.

Ladbrokes Coral already indicated they would like to get a foothold in the Australian market to bypass new legislation that will be introduced in Australia, making it much harder for overseas bookmakers to operate with the freedom they have in the past.

Acquiring the Tatts wagering arm would be significantly-cheaper for the company given the consortium has no interest in running that side of the business.

Tabcorp merger is ‘do or die’ for the wagering company

A re-evaluation of what Tabcorp is prepared to pay in its Tatts takeover may come back to haunt the company as the lottery and wagering giant seriously considers the consortium’s bid.

It is understood that the original deal to purchase Tatts for $4.34 per share has now had at least 20c shaved off after a shift in market value, but the main sticking point for Tatts will be the wagering side of the company.

Tabcorp is prepared to pay 70c per share for the wagering sector of Tatts while the Consortium – which is already prepared to pay up to 80c more for the lottery arm – is allegedly set to guarantee $1.60 a share.

There has been no official offer of that magnitude by the Pacific Consortium, but it is understood they are more than willing to make it happen now after the interest displayed by both William Hill and Ladbrokes.

If an official bid does come through, Tatts will face an enormous conundrum.

Last week a spokesperson for Tatts said the “Tabcorp merger is in the best interests of Tatts shareholders”, but if the wagering arm deal gets guaranteed Tatts may scrap the Tabcorp agreement if the company does not increase its offer.

Business insiders are describing the situation as a “do or die situation for Tabcorp”, which is increasingly desperate to ward off the competition from online bookmakers.

An acquisition of the wagering arm of Tatts would hand either William Hill or Ladbrokes a license in Queensland, which would effectively bypass the proposed plans to crackdown on bookmakers operating out of the Northern Territory.

Our take – time for Tabcorp to pony up the dough or risk falling into obscurity

What a difference a month makes.

Everything was looking rosy for Tabcorp. Its deal to acquire Tatts looked effectively complete, new state legislation would make it harder for its competition to operate within Australia and live-betting rule changes made ‘in-person’ outlets the only places you can put on a live bet at the touch of a button.

All that has been thrown on its head, firstly with the Pacific Consortium’s bid on Tatts and the news that William Hill and Ladbrokes are circling the wagering arm of the company – which the consortium had no interest in maintaining irrespective.

If the consortium are prepared to guarantee the wagering share price at $1.60 – which now seems likely given they will have competing buyers – Tabcorp is going to have to seriously consider matching it just to maintain relevance in the Australian marketplace.

Tabcorp’s online presence through both the TAB website and its online sports betting company Luxbet are both miles behind the big players in the industry, and without essentially monopolising the offline world and maintaining the coveted non-NT gaming licenses, Tabcorp could be dead in the water.

We cannot see how Tabcorp survives and thrives without successfully completing the deal they thought they had in place well over a month ago. Unless the government comes in to protect them like they did midyear to clamp down on live-betting, Tabcorp risks falling into obscurity.

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