Tabcorp and Tatts merger hits a hurdle

Jeannie Matthews
September 21, 2017

The Australian Competition and Consumer Commission welcomed the court decision to support its appeal, which was based on a view that a takeover would substantially lessen competition.

The Australian Competition and Consumer Commission and the James Packer-backed CrownBet asked the Federal Court in July to review the Tribunal's approval of the deal that would create an $11 billion gaming firm.

Tabcorp approached the ACCC for approval of its planned offer in November, but pulled its application and turned to the competition tribunal in March after the ACCC released a statement containing concerns it had with the deal.

"The court orders that the decision of the tribunal be set aside and the matter be referred back to the tribunal for consideration", Justice Nye Perram said on Wednesday when upholding the appeal.

Tabcorp and Tatts governances will now have to wait five days to hear why the Federal Court sided with the ACCC.

The ACCC had voiced serious concerns about the merger proposal.

The tribunal approved the deal in June with a single minor condition, dismissing concerns over the market dominance that the merged Tabcorp-Tatts business would hold compared to its rivals.

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The court set aside the tribunal's decision and ordered it to reassess the bid.

While the ruling is a setback to Tabcorp and Tatts Group's plans, Tabcorp reinforced to shareholders that it is "committed to the transaction" and material sent to Tatts shareholders outlines the future of the merger.

The deal announced a year ago now faces further delays.

"If the issues in contention are narrow in scope, the tribunal would endeavour to make a new determination by 28 September 2017 after considering the submissions of the parties and the participants", the gambling companies statements said.

Tabcorp has offered 0.8 of a share plus 42.5 cents cash for each Tatts share, which when it was made, valued Tatts at about A$6.4 billion.

I can feel a class action or two coming on and this time don't worry about shareholders suing shareholders.

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