Tabcorp deal helps insure future

Tabcorp's David Attenborough has helped insure the company's long-term future with cheap long-life licences through his ACTTAB acquisition.

Tabcorp's David Attenborough has helped insure the company'’s long-term future with cheap long-life licences through his ACTTAB acquisition.

The deal is the first for Attenborough since the split from his casino arm, now called Echo Entertainment, and at $105.5 million it is a handy boost to earnings.

At some eight times earnings before interest, tax, depreciation and amortisation of $14 million the multiple equates with Tabcorp’s present trading performance and fills a gap on his east coast network which runs south from NSW.

The real prize is the 50-year licences at zero tax on tote earnings and less than 1 per cent on the sports bookmaking licence.

In NSW Tab pays 19 per cent and 10 per cent respectively and the tax hit in Victoria is 7.5 per cent and 4.5 per cent.

Attenborough is sitting on a long-term licence in NSW but his Victorian licence is up for grabs in 2024.

Based on past performance with poker machines continuity south of the border is no sure thing and Attenborough, of course, is appealing the recent court decision to deny him $684 million in compensation for losing the right to the Victorian poker machine licences outside Crown.

Tabcorp, which was advised by UBS, acquired the business from the ACT government, which was advised by Deloittes.

In late morning trade Tabcorp was trading ahead of the market, up 1 per cent at $3.50 a share.

In this sort of market the acquisition of low-cost, long-life optionality is every boss’s dream deal and Attenborough looks to have achieved that aim.