British bookmaker Ladbrokes Coral is considering a £2bn takeover bid for Australian operator Tabcorp Holdings.
Tabcorp, Australia’s largest bookmaker, has just confirmed it has bought 10 per cent of its takeover target Tatts Group for A$638m. Tabcorp last month agreed to buy lottery operator Tatts for A$6.4bn to create a gambling giant in Australia. Ladbrokes is not though believed to be interested in buying Tatts
“The Tabcorp/Tatts situation just got interesting on the weekend,” Citi analysts said. “We think this would be a relatively difficult bite for Ladbrokes given the size of the deal — Tabcorp’s market cap of $3.9bn vs. Ladbrokes’ $A4bn and given Ladbrokes only just closed on the purchase of UK gaming company Gala Coral. The likely rationale for such a move for Ladbrokes reflects the current difficult operating environment in the UK, whereby their gaming machine operations are facing the prospect of further tax hikes and wagering environment remains highly competitive and is currently undergoing a consolidation phase.”
CLSA analyst Sacha Krien added: “Hurdles to a merger other than price and deal structure include FIRB (unlikely), racing industry approvals (difficult, not insurmountable), and government probity and approvals (should be OK).”