Article by Andy Young, The Shout
Tabcorp and Tatts Group have confirmed that they have held talks regarding a merger, but they could not agree on the terms for a deal.
Both parties responded to widespread media speculation regarding a $9bn tie-up between Tabcorp, which runs the TABs in Victoria and New South Wales and Tatts, which runs the Tote in Queensland, South Australia and the Northern Territory.
In its statement Tabcorp said that talks had taken place but have now ended. The statement said: “In response to media commentary regarding a potential merger between Tabcorp Holdings Limited and Tatts Group Limited, Tabcorp confirms that while confidential discussions have taken place regarding a potential merger, the companies were unable to agree mutually acceptable terms and those discussions have ended.
“There are no further discussions taking place between the parties relating to a merger or any other form of corporate transaction.”
Tatts also released a statement, but revealed that the stumbling block in the talks had been the “nil-premium exchange ratio”.
The Tatts statement said: “In response to media commentary regarding a potential corporate transaction between Tatts Group Limited and Tabcorp Holdings Limited, Tatts confirms that confidential discussions have taken place between the parties regarding a potential nil-premium merger of equals.
“Tatts confirms the parties have been unable to reach agreement on key transaction terms, in particular as it relates to a nil-premium exchange ratio. As a result, these discussions have now concluded and there are no further discussions taking place between the parties relating to a nil-premium merger of equals or any other form of corporate transaction with Tabcorp.”
In 2006 Tabcorp made a $1.9 billion, all-scrip bid for Queensland-based UNiTAB, but that move was blocked by the Australian Competition and Consumer Commission. Shares in Tabcorp have dropped more than 10 per cent since this morning’s merger update was released.