SYDNEY, Nov 16 (Reuters) - Australia's top two gambling services firms Tatts Group Ltd TTS.AX and Tabcorp Holdings Ltd TAH.AX said on Monday they had held discussions about a potential merger, but called off the talks when they failed to reach an agreement.
The companies have a combined market capitalistion of A$9.4 billion ($6.7 billion), based on Friday's closing price.
The talks come as Australia experiences a wave of M&A activity, spurred by a 7 percent drop on the sharemarket .AXJO and a 13 percent decline in the local currency since the start of 2015.
Tatts and Tabcorp have been seen as especially open to consolidation since their earnings were hit by deregulation of gambling licences in 2012, a move they are still fighting in court.
In a short statement, Tabcorp said the two companies had confidential discussions about a potential merger but "were unable to agree mutually acceptable terms and those discussions have ended".
Tatts said in a separate statement that "there are no further discussions taking place between the parties relating to a nil-premium merger of equals or any other form of corporate transaction."
The companies issued the statements before the start of trading on Monday. On Friday, shares of Tatts Group closed steady and shares of Tabcorp closed down 2 percent.
($1 = 1.4047 Australian dollars)