Tabcorp to sell Odyssey business to save Tattss deal

Tabcorp to sell Odyssey business
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The logo for Australian gambling company Tabcorp Holdings Ltd (TAB) is displayed outside a TAB branch in central Sydney, Australia, October 18, 2016. Reuters/DAVID GRAY

Tabcorp Holding Limited (ASX: TAH) announced on Thursday that it has committed to divest its Odyssey Gaming Services business following the concern of the Australian Competition and Consumer Commission (ACCC) regarding Tabcorp’s deal with rival Tatts Group (ASX: TTS). Tabcorp also noted other issues of the ACCC regarding the deal with Tatts Group, stating that the AU$6.4 billion transactions will be beneficial for the Australian shareholders and the gaming industry.

The ACCC has issued a Statement of Issues (SOI) on Thursday pertaining to its concerns over the merging of the two giant gambling and gaming companies. “The matter raises complex competition issues in a range of different areas, and industry participants have provided many differing views, all of which we will need to examine in greater detail,” ACCC Chairman Rod Sims said in a press statement.  He added that the partnership could “lessen competition in the supply of monitoring and other services to pokies venues in Queensland.”

Tabcorp said that it is committed to selling its Odyssey business to address this concern of the ACCC. It added that the selling of this business is subject to the receipt of the regulator.

Tabcorp also addressed the issues presented by the ACCC pertaining to the removal of a potential supplier of the totalisator pooling services. The gaming company said that it has reached an agreement with Racing and Wagering Western Australia on the terms upon which Tabcorp will continue to provide pooling services in Western Australia into the future.

The ACCC also added its competition-related concerns, specifically relative to the pooling arrangements and access to racing vision. The regulator added that the deal was questionable on whether or not they will be in a position to competitively bid for wagering licenses in the future.

Tabcorp said that the deal with Tatts is important for the stakeholders of Australia, the racing industry, venue partners, customers and Governments. The company listed the benefits that the deal could achieve, including the provision of a national footprint with an enhanced operational platform which will create a stronger financial base to support its stakeholders.

Tabcorp added that the deal with Tatts can also add funding to the racing industry and venue partners which should also lead to broader economic benefits in the regional areas. The deal was also considered important for the establishment of a well-regulated pathway to national pooling for parimutuel wagering.

ACCC said that it has given the Tabcorp until March 24 to address the concerns of the SOI. The regulator will then announce its final decision on May 4.

Tabcorp’s shares ended lower at AU$4.35, with a volume of 2,316,181 on Wednesday. It opened on the green on Thursday, trading at AU$4.44 at around 2 p.m.