Reporter: Neal Woolrich
MARK COLVIN: The flurry of mergers and acquisitions in the Australian market gathered pace today when Tattersalls and Unitab announced plans to join forces.
Their proposed union will create a $3 billion gaming giant with operations across Australia.
Investors have already given the deal a big tick and pushed the share prices of both companies sharply higher.
But anti-gambling advocates say the merger will only make it harder to address problem gambling.
Neal Woolrich reports.
NEAL WOOLRICH: 2006 is shaping up as a big year for mergers and acquisitions on the Australian market.
The latest to join the party is a pair of gambling giants, queensland-based Unitab and Victoria's Tattersalls.
The companies are proposing a merger, which will give them combined revenue of $3 billion and operations across all states and territories.
CCZ Securities Gaming Analyst Tony Waters says it's a win-win for both sides.
TONY WATERS: At the end of the day, basically, whether in wagering or gaming or lotteries, what these guys are, in effect, doing is running wide area network assets.
So the skill sets are quite complementary, the footprint is an overlapping, and probably most importantly, from Tattersalls' point of view, it's offensive insofar as they take a potential counter-better away from betting for those gaming assets.
NEAL WOOLRICH: Those assets include the 13,000 gaming machines that Tattersalls operates in Victoria.
But the licence to run pokies expires in 2007, and the State Government isn't expected to decide until the middle of this year whether it will be renewed.
Tattersalls is offering 4.3 of its shares or $14 in cash for every Unitab share.
Some analysts have questioned whether the price adequately factors in the risk that Tattersalls could lose its gaming business.
But CCZ Securities' Tony Waters says it's now hard to see where competition for the licence will come from.
TONY WATERS: With Unitab taken out, it's quite hard to see, you know, the most likely bidders would have significant issues in terms of regulatory issues, given that PBL's been one that's been speculated and Woolworths is another one; given that they also own properties in Victoria, it would be very difficult for them to be an operator under a model where they manage other venues' gaming machines.
NEAL WOOLRICH: Tattersalls and Unitab operate different businesses in separate states, so both companies are confident their proposed union won't be opposed by regulators.
And while the companies say the merger is a sure bet, the issue of problem gambling continues to fester.
BRAD HALSE: The amount of money spent on gambling has increased by 4.5 per cent in the December quarter. That follows on from previous five percent increases, and so the actual percentage of dollars spent on problem gambling is increasing.
NEAL WOOLRICH: Major Brad Halse is the Salvation Army's Territorial Communications Director.
He says it could become increasingly difficult to deal with problem gambling if ownership in the industry becomes more concentrated.
BRAD HALSE: If there were fewer players and large entities that seemed or sought to have undue leverage with the various state government authorities which controlled gambling in each state - we're certainly not suggesting that is happening or that would happen as a result of this type of union between large companies - but that would be our concern because we need to work very closely with both the companies and the state government to make sure there are as many safety mechanisms for gamblers.
NEAL WOOLRICH: Despite those concerns investors have given the deal an enthusiastic tick of approval. Unitab's shares soared by almost 13 per cent today, While Tattersalls was up by 7 per cent.
And if that reaction is any guide, the deal looks certain to win shareholder approval when it's put to a vote in June.
MARK COLVIN: Neal Woolrich.
MARK COLVIN: The flurry of mergers and acquisitions in the Australian market gathered pace today when Tattersalls and Unitab announced plans to join forces.
Their proposed union will create a $3 billion gaming giant with operations across Australia.
Investors have already given the deal a big tick and pushed the share prices of both companies sharply higher.
But anti-gambling advocates say the merger will only make it harder to address problem gambling.
Neal Woolrich reports.
NEAL WOOLRICH: 2006 is shaping up as a big year for mergers and acquisitions on the Australian market.
The latest to join the party is a pair of gambling giants, queensland-based Unitab and Victoria's Tattersalls.
The companies are proposing a merger, which will give them combined revenue of $3 billion and operations across all states and territories.
CCZ Securities Gaming Analyst Tony Waters says it's a win-win for both sides.
TONY WATERS: At the end of the day, basically, whether in wagering or gaming or lotteries, what these guys are, in effect, doing is running wide area network assets.
So the skill sets are quite complementary, the footprint is an overlapping, and probably most importantly, from Tattersalls' point of view, it's offensive insofar as they take a potential counter-better away from betting for those gaming assets.
NEAL WOOLRICH: Those assets include the 13,000 gaming machines that Tattersalls operates in Victoria.
But the licence to run pokies expires in 2007, and the State Government isn't expected to decide until the middle of this year whether it will be renewed.
Tattersalls is offering 4.3 of its shares or $14 in cash for every Unitab share.
Some analysts have questioned whether the price adequately factors in the risk that Tattersalls could lose its gaming business.
But CCZ Securities' Tony Waters says it's now hard to see where competition for the licence will come from.
TONY WATERS: With Unitab taken out, it's quite hard to see, you know, the most likely bidders would have significant issues in terms of regulatory issues, given that PBL's been one that's been speculated and Woolworths is another one; given that they also own properties in Victoria, it would be very difficult for them to be an operator under a model where they manage other venues' gaming machines.
NEAL WOOLRICH: Tattersalls and Unitab operate different businesses in separate states, so both companies are confident their proposed union won't be opposed by regulators.
And while the companies say the merger is a sure bet, the issue of problem gambling continues to fester.
BRAD HALSE: The amount of money spent on gambling has increased by 4.5 per cent in the December quarter. That follows on from previous five percent increases, and so the actual percentage of dollars spent on problem gambling is increasing.
NEAL WOOLRICH: Major Brad Halse is the Salvation Army's Territorial Communications Director.
He says it could become increasingly difficult to deal with problem gambling if ownership in the industry becomes more concentrated.
BRAD HALSE: If there were fewer players and large entities that seemed or sought to have undue leverage with the various state government authorities which controlled gambling in each state - we're certainly not suggesting that is happening or that would happen as a result of this type of union between large companies - but that would be our concern because we need to work very closely with both the companies and the state government to make sure there are as many safety mechanisms for gamblers.
NEAL WOOLRICH: Despite those concerns investors have given the deal an enthusiastic tick of approval. Unitab's shares soared by almost 13 per cent today, While Tattersalls was up by 7 per cent.
And if that reaction is any guide, the deal looks certain to win shareholder approval when it's put to a vote in June.
MARK COLVIN: Neal Woolrich.