Australian lottery operator Tatts Group Ltd on Wednesday said it had received a A$6.15 billion ($4.65 billion) cash takeover proposal from a consortium backed by U.S. private equity firm KKR & Co, threatening an agreed merger with Tabcorp Holdings Ltd. The bid values Tatts at A$4.21 a share, the takeover target said. Tatts said its board was assessing how the consortium proposal compared to an offer from betting group Tabcorp that would allow the pair to form an Australian gambling powerhouse.”Once this review is complete, an update will be provided to the market,” Tatts said in a statement.
Tatts shares closed at A$4.35 a share on Tuesday. The Tabcorp offer, which has yet to receive competition approvals, values Tatts shares at A$4.21 based on Tabcorp’s closing price on Tuesday.The Pacific Consortium, which in December made a takeover offer rejected by the Tatts board, also includes Macquarie Group, Morgan Stanley Infrastructure and First State Superannuation Scheme.
Tatts said the terms of the Pacific Consortium proposal showed the group had obtained indicative equity commitments of A$4.6 billion and conditional debt financing for the remainder. The proposal is subject to the completion of due diligence and the unanimous recommendation of the Tatts board.Tabcorp in November purchased a 9.9 percent stake in Tatts to make it harder for an interloper to block their agreed merger.
The Pacific Consortium proposal is via a scheme of arrangement that would require the support of 75 percent of the register, Tatts said. It would include a fully-franked special dividend of up to A$0.25 a share.Representatives of Tabcorp and the Pacific Consortium declined to comment immediately.