The Australian company said that Consortium’s offer wasn’t as strong as Tabcorp’s.
Australia.- Tatts Group Ltd. announced that they rejected the US$5.5 billion offer from Pacific Consortium, the bidding group that features Morgan Stanley, KKR & Co and Acquire Group. The company said that the offer wasn’t superior to what they had already arranged with Tabcorp Holdings.
The company released a statement where they explain that Consortium’s offer “undervalued the lotteries business,” and that the proposal relied on assumptions that simply weren’t correct, mostly inconsistent with Tatts expectations. According to Bloomberg, strategist at Churchill Capital Australia Bryan Hilbert said: “It looks like from this statement that the Tatts board is absolutely not interested in doing a deal with the consortium at the proposed terms. The language is telling the consortium they have a lot of work to do if they want to buy this business.”
With the current rejection, Tabcorp remains as the only bidder, although several sources confirm that Tatts is still expecting more offers, besides a new one from Consortium itself. In the statement, Tatts explained that they would not move forward with Consortium’s bid due diligence. Charlie Green, director at Hunter Green Institutional Broking, owner of Tatts shares, said: “It is an invitation for the consortium to go away and sharpen their pencils and pay more for lotteries and less for wagering.”
Last month, Tabcorp and Tatts Group informed that they were waiting for the final approvals of the merge, which is expected to take six months, leaving a possibility for other companies to make bids. The agreement granted Tabcorp 147 million shares in Tatts Group, which represents 10 percent of the distinguished gaming company.