Australia’s Tabcorp Holdings and Tatts Group have agreed to a A$11.3 billion ($8.7 billion) merger, in a deal which analysts say could help defend against popular online rivals.
The transaction will see Tabcorp offer 0.8 Tabcorp share plus A$0.425 in cash for each Tatts share. That implies a value of A$4.34 per share.
“This transaction is expected to deliver significant value for both sets of shareholders, and material benefits to other key stakeholders including the racing industry, business partners, customers and Governments,” said Tabcorp chairman Paula Dwyer.
“In wagering, combining our two complementary businesses will give us a national footprint and could create a pathway to larger wagering pools,” the chairman added.
Tatts chairman Harry Boon said the offer fairly reflected the strategic value of his company, and the merger would benefit the horse racing industry by offering more liquid wagering pools.
According to a filing from Tabcorp to the Australian Stock Exchange on Wednesday, the merger is expected to result in at least A$50 million per annum of additional funding to the Australian racing industry and A$130 million of annual EBITDA synergies and business improvements, net of benefits to the racing industry in the first full year of integration.
The operator is also expecting net one-off integration costs of approximately A$110 million.
Completion of integration is expected to take approximately two years, said the operator.
“The entry of large global operators such as William Hill and Sportsbet could have helped push a deal across the line as they have taken a sizeable slice of the local wagering market,” said Matthew Felsman, a wealth adviser at AAP Securities, who was earlier quoted by Reuters.