Tabcorp to split casino and wagering divisions, Perpetual gets private equity takeover bid: Economy Roundup

Gambling giant Tabcorp has ended months of market speculation by announcing that it will split its casinos division from its wagering and gaming divisions and raise $430 million in fresh capital.

Under the spin-off plan, shareholders will keep their Tabcorp shareholding (this business will include the company’s wagering, poker machine and gaming businesses) and receive shares in the new casino company, which owns casinos in Sydney and Queensland.

Tabcorp chief Elmer Funke Kupper will stand down in 2011 after the demerger is complete. He said the demerger will allow the two divisions to pursue their very different growth plans.

“Our wagering business has proven to be a strong performer over the past 12 months and continues to adapt well to an evolving regulatory environment and an increasingly competitive marketplace,” he said in a statement.

“Our casinos business is undertaking very significant capital investments in New South Wales and Queensland, and the competitive strategies for the Wagering, Gaming and Keno businesses are showing significant promise.”

Perpetual gets private equity bid

Financial services and investment giant Perpetual says it is considering an approach from private equity firm Kohlberg Kravis Roberts that values the company at $1.75 billion.

The surprise offer, which values Perpetual at $38-40 a share, is a big premium to the $30 share price the company was trading at the end of last week.

Perpetual shares jumped more than 35% on news of the offer to around $39.

However, the board of Perpetual is yet to decide how it will treat the offer.

“The Perpetual board has not formed a view with respect to the indicative proposal and recommends that shareholders take no action at this time in relation to their Perpetual shares,” the fund manager said in a statement.

BHP and Rio end joint venture talks

Mining giants BHP Billiton and Rio Tinto have ended discussions about a potential joint venture involving their iron ore operations.

While the miners claimed that their plan to combine their iron ore assets in Western Australia’s Pilbara region would create $10 billion worth of synergies, regulators around the world and particularly in Europe were concerned of the market power of the joint venture vehicle.

“Both parties have recently been advised that the proposal would not be approved in its current form by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office,” Rio Tinto said in a statement.

“Some regulators have indicated that they would require substantial remedies that would be unacceptable to both parties, including divestments, whereas others have indicated that they would be likely to prohibit the transaction outright.”

Shares lower on US worries

Despite the rush of big corporate news, the Australian market has fallen this morning, with the benchmark ASX/S&P 200 index down 0.4% 4669.3 points at 12:00pm.

While AMP shares jumped 2.8% in morning trade, the major banks have all traded lower, as have big retailers Wesfarmers and Woolworths.

The mood for this morning’s trade was set on Wall Street on Friday night, when US Federal Reserve Chairman Ben Bernanke disappointed the market by not announcing a new package of monetary stimulus for the ailing US economy.

That news helped push the Australian dollar to parity, although the currency has since retreated slightly and was at 99.26c this morning.