Australian betting giant Tabcorp has been dragged into a net loss partly due to the $54 million it has spent chasing its proposed merger with Tatts, but the company insists the move will pay off for shareholders.
Tabcorp on Friday revealed a $20.8 million loss for the past financial year, compared to a profit of $169 million the year before.
The company’s chief executive, David Attenborough, said the year had been “strategically important”, and the hefty investment in its campaign to take over Tatts was worth any risk the regulators might knock the deal back.
“The combination is expected to deliver at least $130 million per annum … from synergies and business improvements,” he said.
“When you put that sort of number on the table, then what we’ve spent so far is not a big bet for the benefit it will bring.”
Tabcorp, one of the world’s largest publicly listed gambling companies recorded a underlying net profit of $178.9 million, but fell to a loss due to a slew of “significant items”.
These included $61 million related to Austrac’s money laundering civil proceedings; an operating loss of $47.6 million and a $20.7 million impairment for its troubled UK joint-venture Sun Bets; its acquisition of a gaming technology firm INTECQ; and the $53 million in costs linked to the Tatts merger bid.
Mr Attenborough said on Friday that Tabcorp’s core businesses – including TAB, gaming, Keno and media – were in “good shape” and “strategically we have done an awful lot”.
He said he expected the proposed merger with Tatts to be completed by December, and the next financial year should be “transformational”.
“We are really focused on getting it done,” he said.
The $11 billion Tatts-Tabcorp merger plan, however, is facing a potential setback in light of fresh legal appeals.
The Australian Competition and Consumer Commission and CrownBet have applied for a judicial review of the Australian Competition Tribunal’s approval of the proposed merger, with a case to run in the the Federal Court later this month.
The applications claim the tribunal made reviewable errors when it dismissed a litany of concerns about the potential lessening of competition due to the merged entity’s inflated market power.
Mr Attenborough would not comment on the prospect of the merger bid being blocked, saying his focus was squarely on “getting the deal done”.
A scheme booklet will be provided to Tatts’ shareholders in September, ahead of a shareholder vote on the deal in October.
Except for Racing Victoria, every racing state in Australia supported the Tatts-Tabcorpmerger, saying it could lead to a national TAB and turn Australia into one of the most profitable jurisdictions in the world, outside Hong Kong. Supporters of the merger also said it could realise an extra $50 million a year for the racing industry.