The $4.4 billion merger of equals between Tattersall’s and Unitab appears home and hosed after the Brisbane-based gaming company selectively released some of the proxy voting information ahead of the shareholder meeting at 3.15pm this afternoon.

Unitab CEO Dick McIlwain was gilding the lily big time with The AFR when he revealed the proxies showed “one of the strongest positive votes in the company’s history”.

Given that most Unitab resolutions are supported by the normal 98%-plus of shares voted, this is a huge call.

I’ve voted against the merger by proxy on the grounds that Tattersall’s carries too much political risk with its Victorian pokies licence. It will be interesting to see how strong the support is from the small shareholders because this scheme of arrangement requires support from 75% of shares and 50% of shareholders. On the second count, my 34 Unitab shares have as much voting power as the 7% held by director Kevin Seymour.

Of course, McIlwain shouldn’t be saying anything about the proxies until after the debate at the meeting, but this sort of leak is designed to snuffle out debate.

Rupert Murdoch did the same thing by leaking the proxies on News Corp’s move-to-America vote in 2004 to his own papers the night before the much-anticipated shareholder vote.

By way of contrast, when the proxies are tight a board will sometimes refuse to disclose them at all. The best example of this was the 2001 BHP and Billiton merger vote when chairman Don Argus refused to tell the meeting the state of the proxies, even after the polls had closed.

The Australian shareholders who backed this merger in a tight vote made a spectacular blunder as Alan Kohler explained in this superb column on Wednesday pointing out that the merger has gifted a $26.6 billion windfall to Billiton shareholders.

As Billiton CEO Brian Gilbertson demonstrated, the biggest winners in mergers are often the deposed senior executives. The Age reports today that Tattersall’s CEO Duncan Fischer could walk away with more than $16 million – not bad for an accountant who worked on the early 1990s Estate Mortgage audit for boutique firm Priestley Morris.

The $32 million settlement with the Estate Mortgage liquidator cost Priestley Morris its independence, but this blot on the CV was no problem for Tattersall’s and now Fischer has really hit the jackpot.

Peter Fray

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