There will be a lot of nervous fund managers and shareholders in both Tabcorp and Tatts watching the competition regulator over the next week or so for any signs of a new challenge to the $11 billion merger between the two gaming giants.
While Friday’s greenlight (the second) from the Australian Competition Tribunal for the tie-up of wagering giants, a short statement from ACCC chair, Rod Sims left open the possibility of a second challenge to the deal.
The proposed merger of the two companies had already been cleared once by the tribunal, only to be successfully appealed by the competition regulator (supported by rival Crown Bet) to the full Federal Court – which referred the case back to the competition tribunal for a second examination.
Investors though reckoned the deal was a goer on Friday, pushing Tabcorp shares up 4.8% to $4.98, while Tatts shares rose 2.3% to $4.39.
The Federal Court judge who made the latest tribunal ruling, Justice John Middleton, released a summary of his decision on Friday ahead of the publication of full reasons next week.
"As the tribunal is satisfied that the proposed merger is likely to result in substantial public benefits and that the detriments identified by the ACCC and the interveners are unlikely to either arise or are not otherwise material, the tribunal is satisfied in all the circumstances that the proposed merger would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur," he said.
The only condition imposed on the deal was that Tabcorp sell its Odyssey Gaming business in Queensland. The same condition was imposed in the tribunal’s original decision, and was agreed to by the companies earlier this year.
Justice Middleton foreshadowed that his detailed reasoning including financial information from the parties would remain confidential.
In a statement, ACCC chairman Rod Sims hinted at the prospect of a new challenge, saying his agency would consider the detailed reasoning when it was available.
Mr Sims said the ACCC will consider the reasons of the ACT’s decision when they are published by Justice Middleton next Wednesday. A CrownBet spokesman said it will review the ACT’s latest decision and consider its options.
Tabcorp on Friday said the latest ACT decision represented a significant step forward and that it aimed to complete the deal before the end of the 2017 calendar year.
Tatts Group also welcomed the authorisation, while the ACCC said it had sought the review of the ACT’s original decision to clarify the law. The deal only now needs approval from the Supreme Court of Victoria and from Tatts shareholders, who are scheduled to vote on the merger on November 30 – the same day as the company’s annual general meeting.
Tatts said it will advise shareholders if any change to the timing of the merger meeting is necessary once it reviews the ACT’s reasons for the latest decision.