Tatts has rebuffed a takeover bid by a Macquarie Bank-backed consortium, preferring instead to merge with Tabcorp.
A short time ago, Tatts shares were down 3.4% to $4.395. Tabcorp shares were steady at $4.765, up just 0.3%.
The Pacific Consortium headed by Macquarie had made a cash and shares offer valued at $4.40 to $5 a share for a total of about $7.3 billion.
However, the Tatts board says this bid isn’t as good as the proposed Tabcorp merger which would create a gambling powerhouse with an enterprise value of $11.3 billion and a market capitalisation of $8.6 billion.
“The Tatts board has now assessed the Indicative Proposal and determined it is not a superior proposal,” the company said in a statement.
The Pacific Consortium comprises Macquarie, First State Superannuation, Morgan Stanley Infrastructure as adviser to and manager of North Haven Infrastructure Partners, and affiliates of Kohlberg Kravis Roberts.
The offer was structured so that the Macquarie consortium got the lottery business at Tatts. The wagering and gaming business is then either separated into an ASX listed entity or sold on in a trade deal, possibly to Tabcorp.
Tabcorp and Tatts agreed in October to merge and to create diversified gambling entertainment group and ASX 50 company.
The new entity would combine TAB betting, lotteries, Keno and gaming services and is expected to deliver at least $130 million of annual synergies and business improvements.