October 18, 2016 / 9:11 PM / a year ago

BRIEF-Tabcorp and Tatts reach agreement to combine the two companies

Oct 19 (Reuters) - Tabcorp Holdings Ltd

* tabcorp and tatts to combine

* pro forma enterprise value of approximately $11.3 billion , revenue of over $5 billion

* Combined group expected to undertake a $500 million share buyback

* transaction expected to be eps accretive (before significant items) and value accretive for both tabcorp and tatts shareholders

* combined group expected to target a dividend payout ratio of 90% of net profit after tax, before significant items

* completion expected mid-2017 following tatts shareholder

* transaction is unanimously recommended by boards of tabcorp and tatts

* combination expected to deliver at least $130 million of annual ebitda synergies and business improvements

* Deal is expected to result in at least $50 million per annum of additional funding to australian racing industry

* transaction implies a value of $4.34 per tatts share

* combined group expected to target a dividend payout ratio of 90% of npat

* deal in which tatts shareholders will receive 0.80 tabcorp shares plus 42.5 cents cash for each tatts share held

* directors of tabcorp and tatts believe transaction represents compelling opportunity to create significant value for tabcorp and tatts shareholders

* tatts intends to pay its shareholders a fully-franked special dividend of 20 cents per share immediately prior to implementation

* David Attenborough will be managing director and chief executive officer of combined group and damien johnston will be chief financial officer

* Board will be comprised of existing tabcorp board of directors with Paula Dwyer as chairman

* Tatts chairman Harry Boon will join board of combined group as a non-executive director

* Transaction costs are estimated at approximately $90 million.

* Both tabcorp and tatts expect to continue to pay dividends in ordinary course until implementation of transaction

* on completion, existing tabcorp shareholders will own approximately 42% of combined group, tatts shareholders will own approximately 58%

* Under implementation deed tatts is able to pay a special dividend of up to 25 cents per share

* Tabcorp - tatts intends to pay shareholders fully-franked special dividend of 20 cents per share immediately prior to implementation of transaction

* australiansuper, one of tatts’ largest shareholders, has indicated that it intends to vote its tatts shares in favour of transaction Source text for Eikon: Further company coverage:

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