Tabcorp set for wait on Tatts merger deal

Tabcorp has narrowly avoided a strike on executive pay, as Justin Milne faced a shareholder revolt.

Tabcorp CEO David Attenborough launches the Spring Racing Carnival. Pic: Stuart McEvoy

Tabcorp has just managed to dodge a humiliating strike on executive pay, as it told investors its proposed $11.3 billion takeover of rival Tatts would not serve as a distraction through what is expected to be an elongated approvals process.

A vote on the group’s remuneration report revealed 22.7 per cent were against the level of pay provided to key executives, which included a near half a million dollar jump in the package received by chief executive David Attenborough to around $3.2 million, despite the group’s slide in profit.

The figure just fell short of the 25 per cent protest vote required for a strike against the board.

Investors were similarly aggrieved by a plan to increase the pool of funds for non-executive directors, with 24.1 per cent of votes cast against.

The biggest protest vote, however, was reserved for director Justin Milne, with 25.2 per cent of votes cast against the proposed re-election of the MYOB chairman.

The votes took place at the wagering giant’s annual general meeting in Sydney today, where Mr Attenborough indicated Tabcorp (TAH) was prepared for a thorough review from the Australian Competition and Consumer that is expected to ensure the deal’s completion will wait until mid-2017.

“We expect that relevant approvals will take some time to work through,” he said.

“In the meantime, we remain absolutely focused on executing our core business strategies.”

Tabcorp chair Paula Dwyer echoed similar sentiments while spruiking the planned tie-up, which has received the backing of Tatts’ two largest shareholders.

“The combined group will have a suite of long dated licences and an expected strong investment grade balance sheet,” she said.

“This will provide more capacity to invest, innovate and compete in an evolving marketplace, and over time position the combined business for growth both in Australia and overseas, creating more jobs and increasing returns to the racing industry.

“We currently expect the transaction to complete in mid-2017 following the receipt of required approvals. Until then, Tabcorp will continue to operate as usual and will continue to pay dividends in the ordinary course.”

Tatts and Tabcorp are relying on strengthening competition from online bookmakers to ensure the ACCC waves through the deal, given the combination promises to dominate the wagering landscape outside Western Australia.

Assuming the transaction proceeds, it would pool Tabcorp’s NSW, Victorian and ACT totalisators alongside Tatts’ Queensland, South Australian, Northern Territory and Tasmanian totes, which combine under the TattsBet brand.

That leaves only the WA TAB — long flagged as a $1 billion privatisation option for the state government — as the remaining tote outside the merged entity’s grasp.

However, the WA TAB already combines with Victoria’s to ensure a larger pool, meaning the prospect of a national tote is a near-term option, a change in the dynamic from the three pools currently on offer (TattsBet, TAB NSW and TAB VIC).

The merged wagering behemoth would also extend its reach into gaming, with a dominant position in the very profitable lotto sector.