reports
- Daniel Ragonese
Tatts Delivers a Solid Start to Fiscal 2018, Albeit Cycling Against a ...
Tatts is off to a strong start to fiscal 2018 with first-quarter revenue and EBITDA increasing by 7% and 10%, respectively. The lotteries division was the key driver of the improvement, despite cycling against a weak comparable. Despite tracking marginally ahead of our expectations, the impact on our intrinsic value is negligible. We maintain our Tatts and Tabcorp fair value estimates of AUD 3.80 and AUD 4.20 per share, respectively. At current prices, we believe shares in both companies are sli...
- Daniel Ragonese
Corporate Action: Tatts Shareholders Should Vote in Favour of Merger w...
The Australian Competition Tribunal greenlit the merger between Tabcorp and Tatts, albeit for the second time. The only condition is Tabcorp must divest its Odyssey Gaming Services business in Queensland. As previously indicated, Tabcorp has obtained all necessary State pre-implementation approvals. We believe the merger is most likely to proceed, and the only outstanding item is the shareholder vote. We maintain our narrow moat ratings for both companies, and we expect their competitive positio...
- Daniel Ragonese
Another Spanner Thrown in the Works for Merger Between Tabcorp and Tat...
Another spanner has been thrown into the works for the Tabcorp and Tatts merger, as the federal court has set aside the approval granted by the Australian Competition Tribunal. Contrary to Tabcorp's view, we believe the best-case scenario for both narrow-moat-rated groups would be a delay, while the worst case is the deal falling through. Consequently, we have assessed the impact on our fair value estimates for both firms in the event the takeover does not proceed. In this scenario, our fair val...
- Daniel Ragonese
Tatts’ Result Soft but In Line With Expectations; Coverage Transferr...
We retain our AUD 3.80 per share fair value estimate for Tatts Group following the release of its fiscal 2017 results, and after transferring coverage to a new analyst. At present, the stock is fairly valued. The company reported underlying net profit after tax of AUD 245 million, down 8% on last year, albeit in line with our expectations. The lotteries business cycled against a very tough comparable, with only 31 jackpots (at or above AUD 15 million), down from last year’s record 45 jackpots....
- Daniel Ragonese
The stable lotteries division underpins Tatts' defensive appeal.
The Australian Competition and Consumer Commission’s application to have the Federal Court review the Australian Competition Tribunal’s approval of the proposed merger of Tatts Group and Tabcorp may delay the timing of the implementation of the deal. Not surprisingly, Tabcorp will oppose the ACCC’s application. At this stage, it is difficult to gauge the exact impact on timing though both parties are seeking an expedited hearing. A meeting of Tatts shareholders to vote on the scheme to mer...
- Ravi Reddy
Challenge by Competition Regulator May Delay Tatts-Tabcorp Merger
The Australian Competition and Consumer Commission’s application to have the Federal Court review the Australian Competition Tribunal’s approval of the proposed merger of Tatts Group and Tabcorp may delay the timing of the implementation of the deal. Not surprisingly, Tabcorp will oppose the ACCC’s application. At this stage, it is difficult to gauge the exact impact on timing though both parties are seeking an expedited hearing. A meeting of Tatts shareholders to vote on the scheme to mer...
- Ravi Reddy
Australian Competition Tribunal Gives the Green Light for Tatts-Tabcor...
Overcoming what we view as the last major hurdle, the Australian Competition Tribunal, or ACT, gave the green light for the proposed merger between Tabcorp and Tatts. The only condition, and a minor one at that, is that Tabcorp divests Odyssey Gaming Services, which the company agreed earlier in 2017 to sell to Australian National Hotels. This is a key milestone in the proposed transaction, and Tabcorp’s decision to bypass the Australian Competition and Consumer Commission and go directly to ...
- Ravi Reddy
Tatts Renews the Victorian Government Lotteries Contract
Our AUD 4.20 per share fair value estimate for narrow moat-rated Tatts is unchanged following the successful bid to renew the Victorian Public Lottery licence. The new 10-year licence commences on July 1, 2018 and will provide the group exclusive rights to conduct public lotteries in Victoria, including the sale draw games, Tattslotto, Powerball and Oz Lotto, in addition to a suite of instant scratchies. Tatts will make a single premium payment of AUD 120 million on July 1, 2017, which we have f...
- Ravi Reddy
The stable lotteries division underpins Tatts' defensive appeal.
In light of recent media commentary, we understand Pacific Consortium has walked away from the Tatts acquisition. This follows Tatts' outright rejection of the Pacific Consortium’s revised AUD 4.21 per share all-cash proposal, which left us perplexed, given its simplicity relative to Tabcorp’s more complicated cash and scrip offer. Tatts’ board concluded that the revised proposal is not superior to the proposed Tabcorp merger, and declined to provide due diligence access or engage with the...
- Ravi Reddy
Tatts Rejects the Pacific Consortium’s Revised Indicative Proposal
In light of recent media commentary, we understand Pacific Consortium has walked away from the Tatts acquisition. This follows Tatts' outright rejection of the Pacific Consortium’s revised AUD 4.21 per share all-cash proposal, which left us perplexed, given its simplicity relative to Tabcorp’s more complicated cash and scrip offer. Tatts’ board concluded that the revised proposal is not superior to the proposed Tabcorp merger, and declined to provide due diligence access or engage with the...
- Ravi Reddy
Cash Is King as Pacific Consortium Emerges With an Attractive Revised ...
As anticipated in our prior research reports, Pacific Consortium has emerged with a revised indicative and conditional proposal to acquire Tatts. The revised proposal would see Tatts shareholders receive all-cash consideration of AUD 4.21 per Tatts share. It is superior to and cleaner than the consortium's previous complicated cash and scrip proposal, and is also in line with the implied Tabcorp bid at current market prices. We have raised our Tatts fair value estimate by 5% to AUD 4.20 per shar...
- Ravi Reddy
Tabcorp and Tatts Merger Edges One Step Closer to the Finish Line
We remain confident the proposed Tabcorp and Tatts merger will proceed following the statement of issue, or SOI, released by the Australian Competition and Consumer Commission, or ACCC. Our fair value estimates for narrow moat rated Tabcorp and Tatts are unchanged at AUD 3.80 and AUD 4.00 per share, respectively. Not surprisingly, the ACCC highlighted limited competitive overlap between the retail wagering operations of the merger parties. Tabcorp is the monopoly provider in New South Wales, Vic...
- Ravi Reddy
Tatts' Weak Result Does Not Reduce Its Corporate Appeal; FVE Lowered t...
As guided, narrow-moat-rated Tatts Group reported a weak first-half 2017 fiscal result, albeit slightly below our expectations. The market's key focus is Tatts' corporate appeal, given that it is in play with two suitors: Tabcorp Holdings and a consortium of four financial investors. This soft result does not reduce Tatts' appeal. In our view, Tabcorp is the front runner, as it has a blocking stake, and as the Tatts Board rejected the consortium's indicative bid. The strategic and financial meri...
- Ravi Reddy
The stable lotteries division underpins Tatts' defensive appeal.
In the latest development in what is likely to be an ongoing saga, Tatts Group board has rejected the Pacific Consortium's indicative proposal to acquire 100% of Tatts, and continues to recommend the proposed Tabcorp merger. Our AUD 4.40 per share fair value estimate for narrow moat-rated Tatts Group is unchanged. Tatts' board believes the total value offered by the consortium's proposal is inferior to the proposed Tabcorp merger, highlighting a number of issues with the consortium's financial a...
- Ravi Reddy
Tatts Group Rejects the Pacific Consortium's Proposal; Fair Value Esti...
In the latest development in what is likely to be an ongoing saga, Tatts Group board has rejected the Pacific Consortium's indicative proposal to acquire 100% of Tatts, and continues to recommend the proposed Tabcorp merger. Our AUD 4.40 per share fair value estimate for narrow moat-rated Tatts Group is unchanged. Tatts' board believes the total value offered by the consortium's proposal is inferior to the proposed Tabcorp merger, highlighting a number of issues with the consortium's financial a...
- Ravi Reddy
Tatts Group Rejects the Pacific Consortium's Proposal; Fair Value Esti...
In the latest development in what is likely to be an ongoing saga, Tatts Group board has rejected the Pacific Consortium's indicative proposal to acquire 100% of Tatts, and continues to recommend the proposed Tabcorp merger. Our AUD 4.40 per share fair value estimate for narrow-moat-rated Tatts Group is unchanged. Tatts' board believes the total value offered by the consortium's proposal is inferior to the proposed Tabcorp merger, highlighting a number of issues with the consortium's financial a...
- Ravi Reddy
The stable lotteries division underpins Tatts' defensive appeal.
Our AUD 4.40 fair value estimate for narrow-moat Tatts Group is unchanged, following the indicative and nonbinding proposal from a consortium of investors to acquire 100% of Tatts for a combination of cash and scrip. The new offer from Pacific Consortium values Tatts at between AUD 4.40 and AUD 5.00 per share, composed of AUD 3.40 per share in cash for the lottery business and one share in the wagering and gaming business, valued by the bidders at between AUD 1.00 and AUD 1.60 per share. The pr...
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
- Ravi Reddy
New Bidder Emerges for Tatts Group; Fair Value Estimate Unchanged
Our AUD 4.40 fair value estimate for narrow-moat Tatts Group is unchanged, following the indicative and nonbinding proposal from a consortium of investors to acquire 100% of Tatts for a combination of cash and scrip. The new offer from Pacific Consortium values Tatts at between AUD 4.40 and AUD 5.00 per share, composed of AUD 3.40 per share in cash for the lottery business and one share in the wagering and gaming business, valued by the bidders at between AUD 1.00 and AUD 1.60 per share. The pr...
- Ravi Reddy
Tabcorp Takes Aim at Potential Spoilers by Taking a Blocking Stake in ...
Tabcorp entered into a cash-settled equity swap over a 10% shareholding interest in Tatts. We see this as effectively a blocking stake to ward off potential rivals to the pending takeover proposal for Tatts. Our fair value estimates for narrow moat-rated Tabcorp and Tatts of AUD 3.80 and AUD 4.40 per share, respectively, are unchanged. The about AUD 640 million equity swap, combined with AUD 625 million in cash (AUD 42.5 cents per outstanding Tatts share held before accounting for the equity-swa...
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