Australia Gambling Firm Tabcorp getting Interest from All Sides

The complexities of business can go far above the heads of us ordinary folk. Hostile takeovers and corporate mergers are a common occurrence in the industrial world, but most of us would be hard pressed to explain the intricacies of what such a deal entails. Most of us wouldn’t care to know, either.

But when several of the world’s largest live and online gambling companies start talking acquisitions and mergers, digital pokies enthusiasts like myself tend to take notice. My interest was immediately piqued when I heard Australia gambling giant Tabcorp is in merger talks with its biggest homeland rival, Tatts Group.

And then to find out Ladbrokes Coral is looking to buyout Tabcrop? That’s quite a bit of news to swallow all at once.

Ladbrokes Just Weeks Into Coral Merger

Ladbrokes Coral was just recently formed when it’s namesakes, Ladbrokes Plc and Gala Coral Group, merged into a single entity. Negotiations first began in July 2015, and the £2.3bn merger was completed in November 2016. Effectively, Ladbrokes bought out Gala Coral and changed its name to Ladbrokes Coral Group Plc to reflect the amalgamation of the two brands.

That merger was pivotal, as the new entity instantly formed the largest land-based bookmaker in all of Britain, operating over 4,000 betting shops across England, Scotland and Wales. The company became so large, in fact, that the Competition and Markets Authority demanded they close 350-400 shops in specific regions to prevent detriment to their competitors.

Ladbrokes Serious About Tabcorp Takeover

So here we have Ladbrokes Coral, the largest live and online gambling group in the UK, looking to take over ownership of its Australian counterpart, Tabcorp. No specific offers have been tabled yet, but Ladbrokes Coral confirmed to local media that it’s hired advisers and intends to present an offer for Tabcorp sometime in the weeks ahead.

The Australia gambling giant operates near 2,000 betting shops in NSW and another 600 in Victoria, with on-course betting available at more than 250 racecourses across the country. Tabcorp is also responsible for the operation of more than 13,000 electronic gaming machines, or EGMs (i.e. pokies machines) in Victorian clubs and hotels, and nearly 3,000 Keno games in NSW and Queensland.

Tabcorp Already In Talks With Tatts

Last month, news spread that Tabcorp was in the process of negotiating an AU$9 billion merger agreement with its largest Australia gambling rival, Tatts Group. Much like the Ladbrokes Coral deal, a merger between Tabcorp and Tatts would create a juggernaut in the Australian wagering market. Their combined value is said to be AU$11 billion, destined to generate an estimated annual revenue of more than AU$5 billion.

Tatts runs a virtual monopoly on the Australian Lottery business, operating the Tatts Lottery in ACT, NT, Tasmania and Victoria, the NSW Lotteries in New South Wales, SA Lotteries in South Australia and the Golden Casket in Queensland. It’s lottery presence became so large, Tatts created a single entity earlier this year called ‘The Lott’, just to oversee each of those operations.

And of course, the company also has a large hand dipped into the pool of Australia’s racing and sports betting, as well as pokies machines. Tatts also owns Talarius Plc, which supplies thousands of pokies to operators in the UK.

Last week, we learned just how serious the merger talks between these two massive gambling companies really are when Tabcorp announced it had purchase a 10% stake in Tatts to help facilitate the intended merger.

Second Time The Charm?

This isn’t the first time Ladbrokes has had its eye on the Australia gambling corporation. In 2013, the UK company approached Tabcorp about an acquisition that was quickly rejected. The company had no desire to expand its portfolio at that time.

However, with Australia’s online gambling environment facing much stricter regulation via a proposed amendment – one that could effect Ladbrokes Coral’s right to operate in Australia – Tabcorp may see this as an opportune moment to consolidate with other industry giants.