Pacific Consortium returns for Tatts Group acquisition with ‘all-cash’ AUS $7.3 billion bid

Pacific Consortium the joint-venture investment vehicle of London private equity firm Macquarie Group and New York fund Kohlberg Kravis Roberts (KKR) has restated its intent to acquire Australian gambling operator Tatts Group, by putting forward a AUS $7.3 billion all-cash transaction for the company.

Placing a ‘last minute’ bid for Tatts assets, Pacific intends to derail the operator’s agreed AUS $11 billion merger with Tabcorp Holdings, which still awaits regulatory approval by Australian market authorities.

Pacific changes its approach to Tatts investors by making its deal ’all cash’. Last November the consortium had its AUS $7.3 billion (£4.5 billion) cash and future ASX-listed shares bid swiftly turned down by Tatts governance.

Chasing the acquisition, Pacific management is keen to takeover Tatts lottery business, splitting the division from other Tatts gambling assets, which will be sold or incorporated into a separate ASX-listed business.

The Tabcorp-Tatts merger remains under review by the Australian Competition Tribunal (ACT), who have until mid-June to declare whether the deal will proceed.

Prior to its review, several Australian market competitors detailed that the Tabcorp-Tatts merger would ‘likely to substantially lessen competition in the supply of monitoring and other services to pokies venues in Queensland’. An action that was countered by Tabcorp selling its Queensland games machine business Odyssey.

Following a turbulent H1 2017 for Tabcorp in which corporate perfromance has been hindered by the operator having to pay a record AUS $45 million (£27 million) settlement with financial watchdog AUSTRAC, Tabcorp governance is seeking to speed up the Tatts merger delivering good news to its corporate investors.

At present, Tatts governance has made no official comment on whether the new Pacific Consortium cash-offer will be reviewed.