Australia Gambling Operator UNiTAB Mulls Over Tabcorp

Online Casino Project Staff
June 7, 2006

As Australia's second largest gambling operator, UNiTAB Ltd., seeks to merge its assets, two offers have surfaced from UNiTAB's competitors, Tattersall'sand Tabcorp Holdings Ltd.  The most recent offer came from Tabcorp on June 1, and was rejected by UNiTAB board members on the grounds that Tabcorp's offer failed to recognize the strategic benefits they would incur as a result of gaining control of their greatest competitor in the Australian gambling industry.

Rather, UNiTAB says they prefer the offer made by Tattersall's, which although was less than the US$1.4 billion bid from Tabcorb, allows UNiTAB to have more control of its assets, and give equal representation of board members from both companies.  The mergers of equals bid proposition from Tattersall's, which came over two months ago, is the preferred offer at this time, although there is a good chance that shareholders may vote to reject the merger offer made by Tattersall's.

Although the UNiTAB board said they feel it is unlikely that Tabcorp will come back with a better offer, Tabcorp themselves have given signs they are prepared to make a higher bid - one that gets the attention of UNiTAB shareholders, and hopefully the board as well.  Considering Tabcorp is the largest gambling operator in Australia - with a deep supply of resources, the possibility of a better offer remains very likely.

However, there may be other reasons why UNiTAB is hesitant to merge with Tabcorp.  If they were to accept Tabcorp's offer, the deal would need to be approved by the Australian Competition and Consumer Commission, not to mention racing industry regulators and the government itself.  In order to account for governmental requirements, the value of the deal could go down.  The deal with Tattersall's, on the other hand, would be easily approved, and would give UNiTAB a chance to compete for the Victoria gambling license that Tabcorp now holds.

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