Tabcorp-Tatts merger nears conclusion as Tatts sets up October Shareholder Vote

Updating the market, the governance of Australia ASX-listed Tabcorp Holdings Plc has provided a corporate update on its AUS $11 billion merger with Tatts Group, which will create the ‘outright Australian gambling market leader’.

The Supreme Court of Victoria has ordered for a meeting of Tatts shareholders on Wednesday 18 October to vote on the proposed Tabcorp-Tatts combination.

In preparation for the vote, Tatts governance has published details of the shareholder meeting, alongside an independent ‘experts review’ of the combination for ASX stakeholders.

The independent review has been prepared by Melbourne based corporate advisory group, Grant Samuel.

First announced in October 2016, the Tabcorp-Tatts combination has undertaken a tough regulatory road towards its final shareholder vote. Last March, under pressure from investors, Tabcorp governance dropped deal regulatory supervising body ACCC (Australian Competition and Consumer Commission) for ACT (Australian Competition Tribunal), a move that would draw criticism from a number of  market rivals.

In its review, Grant Samuel details that it is in the ‘collective interest’ for Tatts shareholders to approve the combination.

“The Independent Expert has concluded that the Transaction is in the best interests of Tatts shareholders, in the absence of a superior proposal. The Independent Expert referred to the fact that the value of Tatts shareholders’ collective interest in the Combined Group will be greater than their contribution of value to the Combined Group, and the terms of the Transaction provide a meaningful premium and payment for synergies and business improvements.”

“Tabcorp has calculated the implied value of the scheme consideration (based on the Independent Expert’s fundamental value of Tabcorp and Tatts plus a notional value for synergies and business improvements and less transaction costs), as $4.25 to $4.67 per Tatts share.1 This value includes $0.47 per Tatts share of value in relation to the expected synergies and business improvements (assuming these benefits are realised in full, of which there is no guarantee) and net of one-off integration costs.2 This valuation range represents a significant premium over the Independent Expert’s fundamental value of Tatts shares on a standalone basis of $3.68 to $4.00 per Tatts share”.

Updating investors and the media, Tabcorp detailed that it targeted a November conclusion for its long awaited Tabcorp-Tatts approval. Tabcorp’s Chairman, Paula Dwyer, commented on the update

“The release of the Scheme Booklet represents another important step towards creating a world-class, diversified gambling entertainment group that is expected to deliver substantial financial and other benefits for both Tabcorp and Tatts shareholders, customers, business partners and other stakeholders.

“Together we will be well placed to pursue more investment and innovation across all our businesses, including best-in-class digital products and experiences.

“With substantially all pre-implementation regulatory approvals now in place, we look forward to continuing to work with Tatts to successfully complete the Transaction and are expecting implementation to take place in November 2017.”