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Tabcorp acquisition too big for Ladbrokes Coral: Citigroup


The acquisition of Tabcorp Holdings Ltd will be a “relatively difficult bite” for Ladbrokes Coral Group Plc, said analysts from Citigroup Inc. quoted by Bloomberg.

Earlier this week, it was reported that Ladbrokes Coral was interested in acquiring Tabcorp in a multi-billion dollar deal.

The deal would create one of the world’s biggest gambling groups, worth close to GBP5 billion (US$6.2 billion). It follows from the recent merger of Ladbrokes and Coral, a GBP2.3 billion deal, which was finalized earlier this month.

According to Citigroup, assuming a takeover premium of at least 30 percent, the merger would cost nearly US$3.7 billion, more than Ladbrokes’ market value of GBP 2.4 billion (US$3 billion).

Any offer from Ladbrokes would reflect a “difficult operating environment in the U.K,” Citigroup said.

Gaming machine operations face possible tax increases and the betting market is “highly competitive,” it added.

Last month, Tabcorp announced it was planning to merge with rival Tatts Group. Later it grabbed a 10 percent stake in Tatts Group in a strategic move to further lock down the merger between the two.

But it is understood that Ladbrokes is not interested in acquiring Tatts Group, which would prove awkward for Tabcorp who will need to choose between the two.

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