Tatts, Tabcorp say merger talk over after agreement not reached

Tabcorp and Tatts Group announced to the stock exchange that talks regarding a merger have failed and will not continue after both companies were unable to agree on the terms.

“Tabcorp confirms that while confidential discussions have taken place regarding a potential merger, the companies were unable to agree mutually acceptable terms and those discussions have ended,” said Tabcorp.

“There are no further discussions taking place between the parties relating to a merger or any other form of corporate transaction.”

Tatts similarly released a statement saying that the parties have been unable to reach an agreement on key transaction terms, “in particular as it relates to a nil-premium exchange ratio.”

“As a result, these discussions have now concluded and there are no further discussions taking place between the parties relating to a nil-premium merger of equals or any other form of corporate transaction with Tabcorp.”

CLSA Research said Tabcorp’s and Tatts’ wagering businesses suggest synergies could be A$80 million for a full merger.

“For Tabcorp shareholders, a takeover bid for Tatts would likely be earnings dilutive, suggesting a merger of equals would be more palatable.”

“For Tatts shareholders, a sale of wagering could de-risk the turnaround of that business and potentially drive a re-rating of Tatts’ remaining assets (i.e. lotteries).”