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New Potential Bidders for Australian Betting Giant Tatts
- December 19, 2016 By Oliver Young -
This is a time when the increased market pressure and other factors have forced many gambling and betting operators to consider merging with each other in order to minimise their expenses and increase their profits. The logic behind these decisions is pretty clear and betting and gambling companies aren’t the only business who decide to merge in order to create larger entities.
In 2015, there were two larger mergers. First, the merger between Ladbrokes and Gala Coral was announced and later, Paddy Power merged with Betfair. In the last 12 months there were several merger discussions and attempts and many experts have predicted that the trend of mergers will continue.
The Pacific Consortium and Tabcorp Have Announced Their Interest
Tatts is one of the largest gambling operators in Australia. UBET, one of the country’s most popular sports betting brands is under Tatts and under Australian legislation, UBET is the exclusive retail betting provider in South Australia, Tasmania, Queensland and the Northern Territory. UBET offers horse racing, greyhound racing as well as sports betting. In addition to its retail chain, UBET also offers online betting.
It is already a known fact that Tatts considers merging with its arch-rival Tabcorp, another Australian sports betting and gambling giant. The proposed merger was valued at an amount of AU$11 billion. If the two companies agree soon, the merger can be completed by the summer of 2017. However, the merger is far from concluded, as there is another company that is interested in purchasing Tatts. Namely, there is a Pacific Consortium consisted of Morgan Stanley Infrastructure, First State, Kohlberg Kravis Roberts and led by Macquarie that has expressed an intention of buying Tatts.
The Consortium has reportedly made a bid worth AU$7.3 billion, and that might be a serious threat for the proposed Tatts – Tabcorp merger. If Tabcorp and Tatts do merge, it has already been suggested that the two companies will create a new entity and unite all operations, whereas if the Consortium’s bid is accepted, it is very likely that Tatt’s products will be separated, so that future investors will be able to purchase only the product that they want to.
UK Betting Operators William Hill and Ladbrokes Coral Are Potential Investors
The situation with Tatts and the possible acquisition of this company’s shares is even more complicated, because UK’s leading operators William Hill and Ladbrokes Coral have also stated their interest in acquiring Tatts. Some might find this surprising as both companies have already invested in Australia and are already present on the Australian market.
Both William Hill and Ladbrokes Coral have been offering betting services in Australia since 2013. But, it has been announced that local governments plan on implementing stricter laws and regulations regarding operators that are not based in Australia. It has been suggested that operators like William Hill and Ladbrokes Coral see the potential investment in Tatts as a way of getting round the announced stricter regulations.
These operators have realised that the Australian market is growing and that they should try and keep a strong presence on it, which is why they are willing to consider investing a significant amount of money, just to gain a status of a locally based operator.