In a bid to outmanoeuvre Tabcorp Holdings and derail the firm’s planned AUS $11 billion merger with Tatts Group, the Pacific Consortium has offered Tatts investors a ‘deal sweetener’ should they favour their AUS $7.3 billion all-cash for Tatts assets.
The joint-venture investment vehicle headed up London private equity firm Macquarie Group and New York hedge fund Kohlberg Kravis Roberts (KKR) will allow for Tatts governance to continue to pay-out dividends to corporate shareholders, should a takeover extend beyond the 2017 period.
Updating deal stakeholders, Pacific management stated its incentive would add greater investor value for Tatts shareholders. The consortium believes that its all-cash offer matches the exact same value as a Tabcorp merger, and further offers Tatts investors more flexibility and options.
Pacific details that its buyout would require no federal review process and furthermore, company investors would gain from the future sale or listing of Tatts ’non-lottery’ divisions.
Since presenting its initial bid to acquire Tatts Group, Pacific management has detailed that its priority is to turn Tatts Lottery businesses into a separate entity splitting the division from other Tatts-related gambling assets.
At present, 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.
Australian business news sources report that Tabcorp governance is seeking to fully halt the rival bid by influencing Tatts shareholders to vote down against Pacific’s approach. At present Tabcorp owns 9% of equity in Tatts Group, Australian business commentators have stated that the firm my choose to increase its shareholdings as a ‘blocking tactic’.