Australian gambling operator Tatts Group said on Friday that it has decided to reject an A$8-billion takeover bid from the Pacific Consortium in favor of a previous merger offer from local arch-rival Tabcorp.
The Pacific Consortium made a bid for the gambling company in mid-December. The group of investors was comprised of Macquarie Group, North Haven Infrastructure Partners, First State Super, and KKR. They offered a price of A$4.4 to A$5 per single Tatts share. In comparison, the proposed merger with Tabcorp valued the company at around A$4.34 per share.
Commenting on its decision to reject the Pacific Consortium’s approach, Tatts said in a Friday statement that the offer contained assumptions that were incorrect, inconsistent with its expectations, or simply unknown. In addition, the gambling operator noted that the group of investors undervalued its business, particularly its lottery operations.
The Pacific Consortium was and probably still is particularly interested in Tatts’ lottery division. Generally speaking, the operator controls lottery operations in the greater part of Australia, including New South Wales, Queensland, the Australian Capital Territory, Southern Australia, Victoria, and Tasmania, which explains its allure to investors.
As for the company’s wagering business, the group of investors planned to split it from the group into a separate vehicle or to sell it to an interested party. Word has leaked out that UK gambling giants Ladbrokes Coral and William Hill could turn out to be interested in Tatts’ sports betting operations.
Following the announcement about the bid’s rejection, the Pacific Consortium said in a statement that it would now need time to review and absorb the situation. According to analysts, the investors group is far from done with its attempts to buy the Australian gambling operator.
As mentioned above, Tatts favored the proposed merger with Tabcorp over the takeover offer. The two operators announced in October that they had agreed on an A$11-billion tie-up to create a gambling powerhouse that would try to blunt competition from overseas companies. The merger is expected to be closed in mid-2017, which means that interested buyers have around six more months to try to lure Tatts into a deal.
