By Clyde Mooney
Following its announcement last October, gaming giant Tabcorp has tabled a proposed demerger of their Echo Entertainment Group to be voted on at the upcoming shareholder’s meeting, on June 1 at the Melbourne convention centre.
The plan is to separate Tabcorp’s casino business interests, employing around 8000 people, from its wagering, gaming and Keno business, which employs around 2000 people.
The split will potentially come into effect by the start of the new financial year and both new companies will be listed on the Australian Stock Exchange.
If the merger is implemented each eligible shareholder will receive one Echo share for every Tabcorp share held on the record date.
Directors have unanimously recommended for shareholders to vote in favour of the resolutions.
Independent expert Grant Samual, appointed by Tabcorp to analyse the conditions of the proposal, says that the demerger is in the best interests of Tabcorp shareholder.
Tabcorp chairman, John Story, explains that the two branches experience different growth, management and investment characteristics and a split would be better for the profitability of each.
“Over the past decade, Tabcorp has built three strong operating divisions, which are each of a substantial size and market leaders in their own right," he said.
"The priorities for these businesses have started to diverge, and will increasingly do so in the future.”
Shares in Tabcorp were trading at $7.62 at 3pm today (April 18), up from $7.29 seven days ago.