Australia's Tatts eyeing state lottery
SYDNEY (Reuters) - Australian gaming group Tatts Group Ltd (TTS.AX) has room on its balance sheet for acquisitions, with the lottery in New South Wales, Australia's top state by population, top of its wish list, the company said on Friday.
The New South Wales government may decide to sell the lottery to raise cash after seeing a steep drop in income from property taxes as house prices fall and less homes exchange hands.
A decision could be made public on November 11 when the government announces revised budget measures.
"There's a lot of chatter about NSW lotteries. We want to keep ourselves fresh and ready for that. It could be A$500 million-plus ($388 million) there if we can get hold of it," Tatts Group Chief Executive Dick McIlwain said in an interview on Friday.
"We're enabled. If, and it's a big if, the NSW government decides to sell it and put it out to tender we'll certainly turn up and have a good look at it," he said.
Tatts operates lotteries in other Australian states and analysts say the operating efficiencies it could find in such an acquisition would give it an advantage over other potential buyers, such as Intralot (INLr.AT) which has an operation in Victoria.
Tatts had not approached the NSW government, McIwain said.
The group was also on the lookout for other acquisitions if asset values declined relative to Tatts own, although he said a tie up with rival Tabcorp Holdings Ltd. (TAH.AX), Australia's top gaming company, was unlikely despite clear opportunities for cost savings under a combined structure.
"I don't see any real opportunity for us and Tabcorp to get together while they hold their present value and the market rates the stock prices the way they do at the moment," McIlwain said.
Shares in Tatts and Tabcorp Ltd (TAH.AX) dived in April when the state of Victoria stripped them of their duopoly over the state's 13,750 slot machines from 2012.
Tabcorp Chief Executive Elmer Funke Kupper said in August the synergies between the two companies were not particularly large.
"I disagree entirely. If they really believe that then why is it they've talked to us on and off about putting the businesses together. There are clearly benefits," McIlwain said.
McIlwain said Tatts had seen a strong start to trade in the first half and the group maintained its forecast for single-digit profit growth for the full year.
"We haven't changed our view on what the full year looks like. The UK's been a bit tough going so Talarius (gaming) has been fairly slow, but it's been more than offset by a better than expected run in the lottery business here," McIlwain said.
Tatts' net profit before one-offs rose to A$257.6 million ($222 million) for the year to June 2008. Continued...
