In a surprise move, the governance of Australia ASX-listed gambling operator Tabcorp Holdings has announced that it has switched regulatory body supervising its AUS $11 billion merger with competitor Tatts Group.
Updating investors this morning, Tabcorp confirmed that it had filed a direct merger application with the Australian Competition Tribunal (ACT), replacing the Australia Competition & Consumer Commission (ACCC) as deal regulatory supervisor.
Presenting its ACT application, Tabcorp governance highlighted that its Tatts merger had already gained approval from a majority of corporate investors and that its deal was supported by wider Australian gambling stakeholders such as racing, leisure venues and community officials. Detailing its regulatory switch, Tabcorp governance issued the following notice to investors
“Tabcorp has formed a view that it has a compelling case to pursue a merger authorisation application in the Australian Competition Tribunal. Under the authorisation test, the Tribunal balances public benefits of the proposed Transaction against likely detriments, including competitive detriments. This differs from the test the ACCC applies, which is limited to assessing whether a proposed acquisition is likely to substantially lessen competition, and is not able to take into account countervailing public benefits. The merger authorisation will likely deliver greater Transaction certainty compared to the informal clearance process by requiring the consideration of public benefits. Importantly, the merger authorisation application is considered within a statutory timetable.”
Industry commentators have been surprised by Tabcorp’s regulator switch mid-way through its merger deal. Following its initial review of Tabcorp-Tatts, ACCC officials had asked the operators to review gaming machine assets and penetration in smaller Australian states.
Australian business news sources have questioned whether an under pressure Tabcorp governance did not feel confident in gaining ACCC approval. In previous updates Tabcorp governance has stated to investors that it plans to begin its official merger integration by H1 2017, creating Australia’s outright market leading gambling enterprise.
Updating investors Tabcorp Chief Executive Officer, David Attenborough, commented on the matter “Through our extensive discussions with stakeholders since announcement of the Transaction, it has become increasingly clear that there is broad-based support among our stakeholders for the proposed combination with Tatts. After careful consideration of the Statement of Issues, Tabcorp believes the merger authorisation process will deliver greater Transaction certainty. It enables public benefits, including our strong funding relationship with the racing industry, to be taken into account.”