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Tatts Group shares have risen after the Australian gambling company confirmed it received a $5.4bn all-cash offer from a consortium backed by KKR, presenting a potential spoiler to a planned merger with rival Tabcorp Holdings.
Having had a previous bid rejected in December by Tatts, Pacific Consortium – comprising private equity house KKR, Morgan Stanley’s infrastructure arm, First State Super and Macquarie Group – was confirmed by Brisbane-based Tatts as having submitted a revised offer.
The new proposal is a simpler affair, offering A$4.21 ($3.17) per Tatts share, which may include a A$0.25 per share special dividend, to be paid immediately prior to any deal being implemented, but would reduce the cash consideration of the offer.
The new offer values Tatts at about $5.4bn on an enterprise value basis, the company said.
Pacific Consortium was focused on snaring Tatt’s valuable lotteries business and separating it from the wagering and gaming business. It previously tabled a A$4.40 to A$5 per Tatts share offer comprising A$3.40 cash plus one share in the new wagering and gaming company, which could have been sold to a strategic buyer or floated on the ASX.
Last October, Tabcorp made a A$4.34 per share offer with a view to creating an A$11.3bn gaming giant.
Tatts directors said in a statement to the ASX today they continue to believe the proposed tie-up with Tabcorp is in the best interests of shareholders, and recommend this earlier deal in the absence of a superior proposal.
Shares in Tatts were up 0.9 per cent on Wednesday, but had gained as much as 1.7 per cent. The benchmark S&P/ASX 200 was down 0.5 per cent. Tabcorp shares were down 0.4 per cent.