Macquarie Bank consortium makes a counter bid for Tatts

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Macquarie Bank has made a bid for Tatts, potentially sinking a merger with Tabcorp resulting in a partial breakup of assets.

A short time ago, Tatts shares were up 8.8% to $4.50.

A consortium led by Macquarie Group made a cash and shares offer valued at $4.40 to $5 a share for a total of about $7.3 billion.

This is potentially ahead of the proposed Tabcorp-Tatts merger at $6.7 billion which would create a gambling powerhouse with an enterprise value of $11.3 billion and a market capitalisation of $8.6 billion.

The Pacific Consortium comprises First State Superannuation, Morgan Stanley Infrastructure as adviser to and manager of North Haven Infrastructure Partners, and affiliates of Kohlberg Kravis Roberts.

The offer is structured so that the Macquarie consortium gets 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.

The offer is for $3.40 in cash plus one share in the new wagering and gaming company valued between $1.00 and $1.60 a share.

Tatts says its board of directors has not yet formed a view on how the proposal compares to the Tabcorp Merger.

Tabcorp and Tatts agreed in October to merge and to create diversified gambling entertainment group and ASX 50 company valued at $11.3 billion and with combined revenue of more than $5 billion.

The new 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.

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