Second suitor circles lotteries king Tatts
TATTS shares have surged after a new suitor emerged for the gaming heavyweight, delivering an immediate boost for the group’s investors.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
TATTS shares have surged after a new suitor emerged for the gaming heavyweight, delivering an immediate boost for the group’s investors.
In a bold pitch to Tatts directors and shareholders, a consortium of investors has unveiled a $7.3 billion plan to buy the company and spin part of it into a separately listed business.
Shares in Tatts rallied 8.5 per cent after the buyout approach was announced, adding more than $500 million to Tatts’ market value.
The suitor, Pacific Consortium, wants to knock off the merger deal Tabcorp struck with Tatts in October that would create a $11.3 billion Australian gambling titan.
Pacific Consortium is made up of Macquarie Bank, Wollongong-based superannuation fund First State Super, US-based private equity titan Kohlberg Kravis Roberts and an infrastructure investment fund run by investment bank Morgan Stanley, which is also based in the US.
The unsolicited offer could prompt Tabcorp to sweeten the terms of its bid — a move that may further raise the ire of Tabcorp shareholders unhappy with aspects of the merger deal.
Tatts is no stranger to the consortium, earlier this year allowing it to undertake due diligence as a step towards a takeover before the board instead agreed to Tabcorp’s proposal.
The consortium said its deal valued Tatts shares at $4.40 to $5 each, compared with the $4.34 value from the Tabcorp merger.
It plans to pay a hefty cash component of $3.40 and issue one share in the company that would be spun out — a smaller business that would house Tatts’ wagering and gaming assets. The shares in the smaller company have been valued at $1 to $1.60 each.
By comparison, Tabcorp plans to pay 42c cash and issue 0.8 of a share in the merged company for each share investors own in Tatts.
In a statement on Wednesday, Tatts, led by chief executive Robbie Cooke, said it was yet to form a view about the latest offer and would assess it further before issuing an update.
“In the meantime, the directors of Tatts continue to believe the proposed Tabcorp merger is in the best interests of Tatts shareholders and unanimously recommend the proposed Tabcorp merger, in the absence of a superior proposal,” the statement said.
Some Tabcorp shareholders had previously voiced concern about the merger.
An attempt to put the issue to a vote at the group’s annual meeting in October was denied by the Tabcorp board.
Under Australian corporate law, only shareholders in the bigger company — in this case Tatts — get to vote in a reverse takeover, when shares are offered as payment.
Analysts yesterday speculated that Pacific Consortium and Tabcorp might yet strike a deal to carve up Tatts assets.
The main target of the consortium was the lottery operations, they said, while Tabcorp’s drawcard for the merger was Tatts’ wagering and gaming operations.
How the NBN has delivered just in time
The NBN has delivered, and it has done so in what can only be described as the ultimate — the hit-the-ground running immediate — stress test, rites Terry McCrann.
Sydney airport the wrong place at the wrong time
Sydney Airport has some of the sweetest acreage in Australia but when passengers numbers have dwindled from 9 million in the March quarter to 400,000 in the June quarter, that doesn’t count for much, writes Terry McCrann.