Baring a higher price or better structured bid, the board of Tatts (TTS) seems to have opened for the way for the cash and shares offer from rival Tabcorp (TAH) to go forward after rejecting a private offer equity on Friday morning.
Tatts (TTS) has won big. In two consecutive days the company has had a victory in the Supreme Court of Victoria and also framed a deal with the Queensland government whereby its ascendancy in racing and wagering is affirmed.
For some time shares in Tatts Group ((TTS) have struggled as the market wonders how the company will replace earnings to be lost in future years from the changes to poker machine licence arrangements in Victoria. Finally, there appears to be an opportunity on offer.
First half results were weak but better than Macquarie had forecast. Lotteries were impacted by fewer large jackpots and wagering as down due to adverse weather, increased commissions and the impact of inducement offers, which are still permitted in Queensland.
Tatts and Tabcorp ((TAH)) are in trading halts, pending an announcement regarding a scheme of arrangement. Deutsche Bank reviews its merger analysis from November 2015 when discussions between the two companies ceased.
The Northern Territory Racing Commission has advised bookmakers they should stop offering click-to-dial services within 28 days. Deutsche Bank considers this a minor positive for traditional operators such as Tatts as it removes an advantage currently enjoyed by corporate bookmakers.
Deutsche Bank believes the speculated changes by the federal government to the Interactive Gambling Act could be a minor positive for traditional wagering operators such as Tatts as it would level the playing field with corporate book makers in relation to live betting and consumer protection.