CrownBet in contention

Packer-backed bookmaker in line for Tatts merger

JAMES Packer-backed CrownBet has been tipped as a potential bidder for Brisbanebased Tatts Group if regulators reject a merger between the lotteries group and Tabcorp.

Analysts say CrownBet’s improving financial position made it a contender for Tatts in the event the $6 billion merger does not proceed.

The Australian Competition and Consumer Commis- sion has launched a court challenge to the merger between the Australian gaming companies.

JP Morgan said CrownBet could become a player in the battle for Tatts, which is currently on hold while the ACCC appeal plays out in the Federal court. CrownBet has lodged its own application for a judicial review of the proposed Tabcorp merger deal.

The investment bank said CrownBet’s improving margins and the ACCC’s challenge to the merger provided increased potential for a joint bid for Tatts’ wagering and lotteries businesses.

It said CrownBet’s second half earnings in 2017 should be $5.9 million, up 36 per cent from the same time last year.

A Macquarie Group-backed consortium earlier this year had its sweetened $7.2 billion offer for Tatts rejected by the board in favour of the merger with Tabcorp.

Hunter Green Institutional Broking director Charlie Green said speculation of an offer for Tatts from CrownBet “had legs”.

CrownBet, a subsidiary of casino group Crown Resorts, where James Packer is the major shareholder, offers online betting on sports and horse racing.

Mr Green said Crown was relatively cashed up following the sale of offshore assets and could emerge as a rival bidder if the Tabcorp merger fell away.

The Macquarie consortium, which also included private equity firm Kohlberg Kravis Roberts & Co, offered $4.21 a share in cash to buy Tatts, valuing the operator of Golden Casket and Lotto at $7.2 billion.

Deutsche Bank analysts said it was still confident a merger between Tabcorp and Tatts would be approved, calling the appeal a “minor negative” that will likely delay the deal.

Tatts and Tabcorp said they remain committed to the deal. CrownBet did not respond to a request for comment.

Tatts shares dropped 1¢ to $4.03 yesterday while Crown Resorts climbed 32¢ to $12.59.