Tatts Group shareholders overwhelmingly back merger

Tabcorp’s move on Tatts Group to create an $11 billion gaming behemoth is set to sail past the winner’s post today.

Tatts chief executive Robbie Cooke. Picture: Darren England.

Wagering giant Tabcorp’s move on Tatts Group to create an $11 billion gaming behemoth is set to sail past the winner’s post today after the target’s shareholders overwhelmingly backed the deal.

Investors in Tatts finally had their say on the transaction yesterday, with 98.64 per cent voting in favour of the deal, which now needs only the court’s seal of approval, expected today.

“It’s a bittersweet day for all of us,” Tatts chairman Harry Boon said after the vote, which ends the 130-plus year history of the Tatts brand as it moves under the Tabcorp banner.

It has been a tumultuous 14-months since Tabcorp first lobbed its bid but the wagering giant has stood firm to win its prize, seeing off a rival bid and legal challenges to regulatory approval.

Mr Boon told shareholders at yesterday’s AGM, which was held just before the scheme meeting to vote on the deal, that the merger was never going to be a straightforward or fast process. He said it was the unavoidable reality of a transformational initiative.

“The merger will bring together two highly complementary businesses and a deep pool of talent from each organisation, ensuring that the combined entity is well positioned to invest, innovate and compete in a rapidly evolving environment,” he said.

Tatts shareholders will receive 0.8 Tabcorp shares for every Tatts share held and a cash payment of 42.5c per share, which valued the bid at $4.68, based on Tabcorp’s closing share price yesterday.

Mr Boon said at the scheme meeting that the transaction would create a diversified portfolio of gambling entertainment businesses. “It will hold an unmatched portfolio of long-term wagering, lotteries, Keno and gaming monitoring licences,” he said.

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The deal sees Tatts shareholders own approximately 58 per cent of the combined group, which is expected to have pro-forma annual revenue of around $5bn.

The transaction is also expected to deliver increased earnings of at least $130m annually of EBITDA from synergies and business improvements in the first full year, following completion of the integration of the businesses.

The transaction is scheduled to be implemented next Friday and Tabcorp will keep its board in place, with only Mr Boon to join from the Tatts team.

Tatts chief executive Robbie Cooke, who leaves the company post-merger, told shareholders at the AGM that it was a bittersweet moment to be leaving the business at a time when it had increased its performance.

He said that when he joined five years ago, on his second tour of duty with the group, its market capitalisation was $4.2bn — yesterday it was above $6.7bn.

“While it is a sad moment for me to leave such a great business and a team that I have enjoyed immensely putting together and working with over the last five years, it is from a business perspective the right strategic next step,” he said. “We are handing over to Tabcorp a suite of businesses that are in excellent shape.”

Mr Cooke said that in recent days both Ladbrokes and online gambling group GVC had announced a potential merger, which would create a geographically diverse $9.4bn company.

“Scale, together with the operational diversity offered by having wagering, lotteries and gaming businesses under one ownership, are outcomes this (Tabcorp) merger delivers,” he said.

Tatts, in its final annual meeting, also received a first strike against its remuneration report — with a 27.8 per cent vote cast against the report — which chairman Harry Boon said was driven by proxy advisers.