Tatts-Tabcorp merger is being challenged

The Pacific Consortium has presented a new multi-billion-dollar offer in cash to takeover Tatts Group after being rejected last December.

Australia.- The Pacific Consortium might be about to spoil Tatts Group’s plan to merge with rival Tabcorp Holdings as it presented a new offer to takeover Tatts. The group consists of KKR & Co, Morgan Stanly, Macquarie Group and First State Investments and is offering US$5.4 billion to perform the operation.

The offer consists in a payment of A$4,21 (US$3,17) per share with an additional dividend, that may be included, of A$0,25 (US$0,18) per share that will be paid before the implementation of any deal. The proposal would be paid in all-cash, therefore, it doesn’t require any regulatory approval.

The consortium had already made an offer that the company refused last December because it wasn’t better than the opportunity to create a gaming giant with Tabcorp Holdings worth US$ 8.49 billion.

On Wednesday, Tatts directors issued a statement to the Australian Securities Exchange (ASX) that said it “is undertaking a full analysis of its key terms, underlying financial assumptions and conditions”. They added that “once this review is complete, an update will be provided to the market.”

Both companies boards had recommended that the merger should be sealed and was expected to be completed later this year. The deal would see Tatts shareholders receive 0.8 Tabcorp shares and 42.5 cents for each of their own shares. Tabcorp shareholders would control 42 percent of the new gaming giant, while Tatts’ would get the other 58 percent.

However, following Wednesday’s announcement, the deal seems to be endangered as Tatt’s shares rose 1.61 percent while Tabcorp’s dropped 0.63 percent.