Gambling merger gets a green light

THE $11 billion merger of gambling companies Tabcorp and Tatts is expected to be delayed into next year despite approval yesterday for the deal from the Australian Competition Tribunal.

The tribunal’s decision to allow the merger is set to create Australia’s second-biggest gambling company.

But the decision is subject to a 28-day appeal period that is likely to stall the transaction.

Because of the window for appeal, the meeting for Tatts shareholders to vote on the deal — scheduled for November 30 — and the December 4 Supreme Court hearing to validate the merger are likely to be deferred.

The existing merger agreement will expire on December 31 if it is not approved beforehand.

The competition tribunal’s approval comes despite opposition to the takeover from the Australian Competition and Consumer Commission and objections by rival betting company CrownBet.

Justice John Middleton, president of the tribunal, yesterday said the merger would result in “substantial public benefits”.

Shares in both companies rallied after the decision was announced, Tabcorp surging 4.8 per cent to $4.98 and Tatts jumping 2.2 per cent to $4.39.

In a brief statement, Justice Middleton said he had announced the decision before publishing his reasons in order to avoid the potential for insider trading in the two listed companies and to keep the public and market fully informed.

“The tribunal is satisfied in all the circumstances that the proposed merger would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur,” he said.

The approval also came with one condition — the sale by Tabcorp of its Odyssey Gaming Services business in Queensland.

In a statement yesterday, Tabcorp confirmed it had already met the condition and had previously agreed to sell Odyssey to private company Australian National Hotels.

The gambling company did not indicate that there could be delay in the merger from the 28-day appeal window.