The Tatts Group has taken over control of the New South Wales Lottery business. The recent transaction took place and cost Tatts nearly $765 million. This purchase caused its shares to plummet down by 7.3%. The reason for the unreasonable drop could be due to the fact that the company was overpaid for the take over. This has caused great concerns within the stock trading world. The initial thought of the sale was that the gambling company would go for somewhere in the range of $600 to $700 million in Australian dollars. When the company sold near the range of $850 million traders become unsure of the value and the decisions to buy.
The gambling company was purchased through a competitive bidding process that saw the winning company Tatts taking control at the end. Companies outside of Australia were also showing a strong interest in the gambling lottery, however none were willing to pony up the dough to take full charge of it.
Through this new purchase, the company is gambling on selling off some assets and restructuring the infrastructure to consolidate debt and pull itself out of a tight situation. The end result could lead to nearly $160 million in cash as well as other assets which will be turned over to the government.
A large reason to take over more of the larger companies for Tatts is to help prepare themselves for the future when they losing gambling privileges over their slot machines. As their licenses expire, they will need to be prepared to take over with other entities in order to keep themselves turning a profit. The slots gambling has generated their largest portion of revenue and will create a void when they are stripped away at the end of that year. At this time, Tatts operates lotteries in Victoria, Tasmania, Northern Territory, as well as Queensland.
