Gambling giant Tab merges with UNiTAB

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Another Day, Another Dollar
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Reporter: Stephen Long

ELIZABETH JACKSON: Australia has today seen the formation of a gambling colossus. Tab Limited, the country's second biggest gaming company, has agreed to buy UNiTAB, creating a $2 billion company with 3,000 betting shops nationwide.

Meanwhile, trading in AMP shares has been suspended pending the release of documents on the demerger of its UK business.

Our Finance Correspondent Stephen Long joins us with some more details.

Stephen, to Tab first – how have investors reacted to this merger of the big betting shop companies?

STEPHEN LONG: Well, investors have reacted very well, Liz. Shares in Tab Limited rose by as much as 7 per cent this morning, and UNiTAB's up by about five-and-a-half per cent on the news.

It seems it's a bit of reverse takeover, because Tab Limited's going to own about 75 per cent of the new company, its shareholders will have that much. But it's going to retain the UNiTAB name – that's to get around merger restrictions, and takeover restrictions on UNiTAB.

This is a merger of the old Tab betting shops in New South Wales with the Queensland-based operations of UNiTAB, and it's going to create something of a major colossus in the industry.

Tab boss, Warren Wilson, will head the new company; and UNiTAB's Dick McIlwain will be leaving once the takeover is completed.

ELIZABETH JACKSON: What's behind the merger, Stephen?

STEPHEN LONG: Well, we've seen a rationalisation in this industry, because pretty much these companies have reached the limits of the growth that they can have organically, and so they're having to merge to make costs savings.

And in Australia, and indeed internationally, we're seeing a lot of takeovers in the gaming industry, and a lot of consolidation. And so it's that drive to actually grow through mergers, rationalisation and costs savings that seems to be behind this.

ELIZABETH JACKSON: Alright, let's briefly have a look at AMP. What's the latest now on the de-merger?

STEPHEN LONG: Well, the de-merger has been delayed – or at least the release of the documents has been delayed by the Federal Court, meeting in Sydney. Judge Arthur Emmett has put it on hold until this afternoon.

The situation is that the documents have to be approved by the Australian Securities and Investments Commission, and by the Federal Court, before they can be released to the market.

The shares have been suspended because some of this information is out there through the court proceedings, and it contains market-sensitive information, and so in fairness to all investors the shares have been put on hold.

We don't know a lot at this stage, but it seems once the new company is up and running, the boss, Andrew Mohl, who'll be heading the Australian operations, with the UK operations hived off into a separate company, is going to have his pace shaved a little bit, down by at least 10 per cent.

ELIZABETH JACKSON: Yet again. Alright, we'll have to leave it there, Stephen Long, many thanks.

http://www.abc.net.au/worldtoday/content/2003/s968697.htm
 

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