Australia's Tabcorp sees few benefits in Tatts deal - 9th August 2008

MELBOURNE (Reuters) - Tabcorp Holdings Ltd), Australia's top gaming company, said it sees little merit in merging parts of its business with rival Tatts Group Ltd, despite tougher state controls on their operations.

Tabcorp Chief Executive Elmer Funke Kupper was responding to recent comments by his counterpart at Tatts that there would be "great benefits" from combining parts of the two companies.

"I don't think that is a very good idea for us right now. The synergies between our two companies are not particularly large," Funke Kupper told ABC Television on Sunday.

"This would not be very high on my agenda," he said, adding Tabcorp was focused on expanding its Keno gaming business in hotels this year and renovating and expanding its Star City casino in Sydney.

"That is where our capital and our energy will go," Funke Kupper said, adding the company was also looking to overseas expansion perhaps in a couple of years' time.

Last month, Tatts Group Chief Executive Dick McIlwain told ABC Television merging parts of his firm's business with Tabcorp might make sense.

Tabcorp reported an annual net loss last week reflecting the loss of its Victorian slot machine duopoly and a surprise write down on the value of its wagering business.

In April, the state of Victoria shocked Tabcorp and Tatts by stripping them of their duopoly over the state's 13,750 slot machines from 2012 and said it would not refund the companies for the loss of their licenses. The decision hammered both groups' share prices.

The companies plan to fight the government for compensation and have taken writedowns as a result of the license decision.

Shares in Tabcorp ended Friday at A$8.90, down from over A$15 in February, while Tatts shares closed at A$2.47, down from over A$4 in February.

($1=A$1.12)

(Reporting by Victoria Thieberger; Editing by Anshuman Daga)

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