Third try a success
After an extensive nine-month regulatory compliance review, the AUS$11 billion merger of Tabcorp Holdings and Tatts Group has been approved by the Australian Competition Tribunal (ACT).
Proposals for a merger between the two groups had failed twice before. In 2006, Australian Competition and Consumer Commission (ACCC) blocked a deal between the companies on antitrust grounds, while in 2015 the companies failed to come to a mutually satisfactory agreement.
This time, Tabcorp and Tatts decided to take their proposal directly to ACT, normally an appeal court and seen as more “stakeholder friendly”.
Despite a lengthy list of concerns raised by the ACCC and the objections of various competitors, ACT says that it is satisfied that the merger will result in substantial public benefits.
Tabcorp is aiming to complete the takeover of lottery owner Tatts for AUS$6.15 billion ($4.67 billion) in August of this year making the combined companies an automatic market leader with a forecasted annual revenue of more than AUS$5 billion.
Tabcorp’s CFO Damien Johnston said the merger would result in savings of AUS$130 million within the first year as well as “inevitable” job losses.
Earlier this year, the Australian Transaction Reports and Analysis Centre (AUSTRAC) fined Tabcorp AUS$45 million for failures and deficiencies in its AML/CTF (anti-money laundering and counter-terrorism financing) program.
Shares in both companies have risen since the Tabcorp-Tatts merger announcement.
Full details of the ACT review will be published on Thursday 22 June.