Baring a higher price or better structured bid, the board of Tatts (TTS) seems to have opened for the way for the cash and shares offer from rival Tabcorp (TAH) to go forward after rejecting a private offer equity on Friday morning.
Tatts Group rejected the revised all-cash $4.21 a share offer from private equity group Pacific Consortium (which includes KKR, Morgan Stanley and Macquarie Group), saying the bid is not superior to the proposed merger with wagering giant Tabcorp.
“Tatts’ board has determined that the revised indicative proposal is not a superior proposal and cannot reasonably be expected to result in a superior proposal when compared to the proposed Tabcorp merger,” it said in a statement to the ASX.
Tatts said that, as a result, it would not be able to provide due diligence access to Pacific Consortium or engage with it. After a "full assessment" the Tatts Group board said the consortium cannot reasonably be expected to result in a superior proposal when compared to the proposed Tabcorp merger".
Tabcorp has offered a mix of cash and shares – 0.8 Tacorp shares for every Tatts share plus 42.5 cents cash. This values Tatts shares at $4.25.
The Tatts board said it had considered a number of factors including regulatory risks, potential share prices movements and what it called the “conditionality” of Consortium’s revised proposal.
Tabcorp’s $11 billion merger proposal with Tatts will be considered in up to 14 days of hearings at the Australian Competition Tribunal beginning in mid-May, with a decision on that deal by the tribunal in mid-June.
