Tabcorp to Oblige Queensland
The Queensland government has defined what it wants in return for acceding to Tabcorp acquiring UNiTAB.
Responding to the willingness of the Queensland government to accommodate the Tabcorp bid for UniTab, Chief Executive Officer Matthew Slatter radiated optimism about being able to meet conditions disclosed so far. But that is as far as the hotly-contested bid goes for the meantime, until the Australian Competition and Consumer Commission rules on the Tabcorp tender later this month.
In May, the gaming industry leader had made an unsolicited A$1.9 billion bid for UNiTAB, which holds the license to operate totalizator and fixed-price betting on horse and dog racing and sports events in Queensland and South Australia. The bid appeared to trump a friendly "merger of equals" proposal that Tattersall's announced in March.
Queensland Premier Peter Beattie was said to have been concerned about the dislocation and unemployment that might result if Tabcorp took the UNiTAB headquarters out of state. On June 24, Deputy Premier and Treasurer Anna Bligh declared that the government could make a concession on the law requiring that UNiTAB headquarters stay in Queensland provided Tabcorp accede to six conditions.
Among these are that no employees be let go, that the Jupiters Casino headquarters remains in Queensland, that the New South Wales monitoring group transfer to Queensland, UNiTAB's wagering operations must remain in Queensland, that a shared-services department be sited there and that the state's racing industry must receive "significant benefits".
Mr Slatter responded enthusiastically, saying "This is a major step forward for Tabcorp towards the satisfaction of the conditions of its offer for UNiTAB." He affirmed that since Tabcorp wants to deliver benefits to Queensland and its racing industry from the acquisition, he would of course do his utmost to meet government conditions. Such a promise is to be expected since the UNiTAB acquisition would give Tabcorp a monopoly of totalizator business and consequently, the dominant position in gaming across the entire country.
So far, Tattersall's has not put any counter-offers on the table. The original suitor may still believe they hold every advantage since an independent evaluation rendered by Deloitte estimated the fair market value of the consideration being offered to UNiTAB shareholders as being $13.86 to $15.16 per UNiTAB share. The high side of this range is safely above the A$14.25 cash and stock offer made by Tabcorp.
As well, the UNiTAB Board is solidly behind the Tattersall's proposal. Tabcorp has been unable to match the Tattersall's concession that UNiTAB get the chairmanship and half the board seats in the merged company. Furthermore, Tattersall's committed to retaining all "key executives and staff."
On the other hand, the board disparages the Tabcorp price offer, insisting that something like a 25% premium would be justified by the strategic benefits that Tabcorp would get from "securing control of its only credible competitor in totalizator wagering services in Australia." UNiTAB also snidely suggests that Tabcorp is really trying to absorb a potential competitor for its wagering businesses in Victoria.
Meantime, the situation for the rival bidders and UNiTAB is at an impasse. Tabcorp has simply acceded in principle to government conditions but provided no guarantees to date. The ACCC will render a decision on the competitiveness of a Tabcorp-UNiTAB combine only on July 16. And the key vote by UNiTAB shareholders has been re-scheduled for July 26.