Ladbrokes Coral Eyes Australia’s Tabcorp in Merger-Busting Move
Prominent UK bookmaker Ladbrokes Coral, fresh off its own approved and largely completed merger, is now looking at acquiring one of Australia’s largest books, Tabcorp. The possible acquisition of Tabcorp, for a figure reported at around £2.3 billion, would increase by 50% or more the total book value of the Ladbrokes-Coral conglomeration, making the combined company one of the world’s largest sports-betting providers.
There’s an unexpected hitch in this plan, however. Tabcorp has just announced its own merger with major Aussie rival sportsbook Tatts, and any acquisition or hostile takeover by Ladbrokes Coral would be contingent on unraveling that already-announced deal. Few details are available, but Laddies sources have leaked to various British business outlets that the firm has already put together an advisory management group to continue working on the proposal.
The specifics of the preliminary proposal are also tentative, though a part-cash, part-shares deal is the likeliest offer to be tabled. The proposal represents another chapter in the wave of acquisitions and consolidations currently reshaping the gambling sector, but there could be a lot more in play here than first meets the eye. In particular, a possible acquisition of Tabcorp could give Laddies a leg up on chief rival William Hill in another prominent, English-speaking market.
In the UK, Ladbrokes Coral remains in second place behind William Hill, even though the Coral Group side of the merged company gave the new firm some additional online muscle. Both William Hill and the pre-merger Ladbrokes lagged the online market and slowly bled market share in recent years. Laddies’ merger with Coral helped plug some of that for that company, but despite several false starts, William Hill has yet pull off a similar deal. And of course, both companies are facing ongoing public pressure over the FOBT situation in their land-based shops.
Australia has its own unique set of hot-button gambling concerns. Among them, the in-play wagering practice that is common in Europe and the UK but is technically forbidden under Australian gambling law. Several firms that are licensed to provide online services to Aussie punters but do not physically have betting shops there have enacted various workarounds to the law, via rules-stretching smartphone apps.
However, Australia’s Interactive Gambling Act is waiting for a long-promised overhaul. Some of the proposals, recently announced by Australia’s Human Services Minister, Alan Tudge, are long overdue, while others are more questionable. Among the questionable and disputed: A strengthening of the language against in-play betting, yet with an apparent loophole that could allow the activity to continue at Aussie-based firms such as Tatts and Tabcorp.
As explained in a recent story in Australia’s Financial Review: “The corporate bookies argue the inserting of language intended to clarify the allowing of electronic betting terminals in retail outlets actually opens up the possibility of a merged Tabcorp and Tatts being allowed to hand out tablets or smartphones and allow punters to bet in-play as long as they are in the venue – as opposed to a complete ban on such betting outside venues.”
As one unnamed bookie told AFR: “You could conceivably have iPads handed out for people to bet on at the MCG while a match is on, given there is a TAB outlet there.”
Several Aussie-licensed online books, including Ladbrokes Coral, co-signed a letter of protest to the new proposal a few weeks back, but to no avail. Tudge submitted his recommended proposals unchanged, and they await full consideration and possible approval by Australia’s government.
What it means, though, is that a firm such as Ladbrokes has an extra incentive to consider an acquisition or hostile takeover of Tabcorp, if the deal makes reasonable sense based on the financials alone. By acquiring Tabcorp, Ladbrokes Coral could move into a position in Australia where the gambling laws would work in the firm’s favor, rather than against it.
It’ll be interesting to see how this story develops. Should the proposed Tudge changes be approved, then resident Aussie firms Tabcorp and Tatts will indeed have a home-court market advantage. Several firms and independent market analysts have stated that in-play wagering via the existing smartphone-app loophole accounts for about 15% of all online and phone-based betting in Australia. A lot of that traffic could be forcibly migrated to existing Tatts and Tabcorp shops, which proliferate across the country. And viewed in that light, a move by Ladbrokes Coral to acquire Tabcorp — and to do it sooner, rather than later — makes a lot of sense.
Eric has been a sports journalist for over 20 years and has travelled the world covering top sporting events for a number of publications. He also has a passion for betting and uses his in-depth knowledge of the sports world to pinpoint outstanding odds and value betting opportunities.
SBO.net Bookie Selector
Our Bookie selector is designed to find the perfect place for you to bet. Simply answer a few quick questions and we’ll choose the best online bookmaker for you.