Will the Tatts/Tabcorp Merger Get Over The Line?

Shares of Tabcorp have been under pressure this week as the $11 billion merger with Tatts hit another legal hurdle.

On Wednesday, the lengthy merger talks were thrown into uncertainty with the Federal court finding in favor of arguments from the ACCC about why the deal should be reviewed further.

The combination of Tabcorp and Tatts is expected to deliver at least $130 million per year from synergies and business improvements, so shareholders are anxious to get the deal completed.

From the government’s perspective, it’s clear that they would like to continue consolidating corporate bookmakers to tighten up the regulatory aspect of the industry. It’s our base case that his merger will be completed in within a month.

However, we see scope for negative headlines to push the shares back into the low $4.00 support area. After the the merger is completed, we would expect to see TAH shares trade back into the $5.10/25 area.