Tatts Sticks with Tabcorp for Merger
On Friday, Australia’s Tatts Group announced they had decided to proceed with the proposed merger with rival Australian operator, Tabcorp and had turned down a A$7.3 billion takeover bid from Pacific Consortium, a consortium led by the Macquarie Group.
Tatts stated that the consortium’s offer of between $4.40 and $5.00 per share for its lottery business was inadequate due to incorrect or inconsistent assumptions made by the group compared to its current expectations and that the offer made by the consortium was not “superior” to the offer made by Tabcorp.
The Pacific Consortium, which is led by Macquarie Group, but includes Morgan Stanley and KKR & Co., planned to sell off or separately list the betting and gambling operations of the company. On the other hand, the proposed merger between Tatts and Tabcorp would create an $11.3 billion entity.
“The board continues to believe that the proposed Tabcorp merger is in the best interests of Tatts shareholders and unanimously recommends [the merger] in the absence of a superior proposal,” read a statement released by the company to the ASX.
The company was quite clear in its rejection stating that if the consortium returned with a new bid, Tatts would once again reject the offer “given Tatts believes the total value offered is not superior to the proposed Tabcorp merger.”
The $11.3 billion entity that a merged Tatts and Tabcorp would result in would have combined market capitalisation of around $8.6 billion, would generate revenues of more than $5 billion and would control around 90 percent of Australian totaliser betting.
The proposed merger would see Tatts shareholders receiving 0.8 Tabcorp shares, as well as 42.5 cents per Tatts share that they hold.
March 30, 2017