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Woolies takes on Tabcorp in pokies pushVANDA CARSONDecember 8,...

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    Woolies takes on Tabcorp in pokies push
    December 8, 2009 - 11:08AM

    Woolworths is set to take on gambling giant Tabcorp as it eyes troubled listed pub operator National Leisure & Gaming, in a further push into hotels and lucrative poker machines.

    Sources close to the deal say the grocery, liquor and poker machine giant is considering an offer for NLG. If successful, Woolworths could increase its poker machines from about 11,000 to nearly 12,000.

    It could also increase the number of hotels it runs from 280 to 316. Woolworths runs its hotels under the Australian Leisure & Hospitality joint venture with pub baron Bruce Mathieson.

    Its move comes as rival grocer and liquor merchant Coles is considering selling its hotels.

    Tabcorp would be buying at the bottom of the market and buying more than 900 poker machines.

    NLG, which has 36 leasehold pubs in NSW and Queensland, has a market capitalisation of $15 million, but was worth $370 million when it floated four years ago.

    The company borrowed heavily at the top of the market and has been hit by falling poker machine, food and beverage revenues. NLG's banker, a division of National Australia Bank, has lent it $183 million.

    NLG's trading outlook for the 2009-10 financial year forecasts total revenue of about $197 million, including about $94 million from poker machines.

    BusinessDay last month revealed that Tabcorp was looking to buy NLG's shares on market and also take on the company's debt.

    Woolworths and Tabcorp are both keen to increase their poker machine numbers as they have a high profit margin with very few operating costs.

    However, their moves come at a time of uncertainty for the industry given potential changes to regulation which could be triggered by the Productivity Commission inquiry into gambling which is due to be released next year.

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