The Pacific Consortium group led by the private equity firm KKR & Co revealed that it has revised its takeover offer for the largest lottery operator that currently exists in Australia. According to the announcement, the updated all-cash acquisition bid for Tatts Group Ltd amounts to A$6.15 billion, surpassing the previous takeover offer of its rival Tabcorp Holdings Ltd.
The decision which bid to favour would not be an easy one for Tatts Group, as both offers are valued at a price which is smaller than the company’s trading price. Currently, the group led by KKR values the company at A$4.21 per share. In comparison, its rival Tabcorp has offered a price of A$4.209 a share, with both of the offers being lower than the trading price of A$4.38 per share reached by the Tatts on Wednesday.
The decision would not be an easy one for Tatts’ board, as the latter’s members are divided in their opinions if they should favour the acquisition offer of the Pacific Consortium or the one of Tabcorp.
This is not the first time when the Pacific Consortium makes a takeover proposal to Tatts Group. As CND has already reported, the Consortium, which consists of KKR, Morgan Stanley Infrastructure, Macquarie Group and First State, has previously made a massive A$8-billion takeover offer, which however was rejected by the Australian lottery operator in favour of a previous merger offer made by Tabcorp.
The bidding war between the KKR-led Consortium and Tabcorp started in the autumn of 2016, after the latter announced its intentions to merge with Tatts Group. In October last year, the two operators announced that they had reached an agreement for an A$11-billion deal in order to establish a gambling giant aimed at offsetting the competition from overseas operators. According to the information provided by the companies, the merger was set to be finalised in the middle of 2017.
Then, a couple of months later, in December 2016, Tatts Group faced the first takeover bid of the Pacific Consortium, which amounted to A$8 billion. The group of investors offered a larger acquisition price of A$4.4 to A$5 per share, which exceeded the proposed merger price of A$4.34 per share made by Tabcorp.
At this time, Tatts Group preferred to reject the takeover bid of the KKR-led group of investors in favour of the Tabcorp’s offer. At present times, however, the largest lottery operator in Australia commented on the renewed bid, saying it has taken into consideration the new bid of the Pacific Consortium, and assessing whether it was better than the one made by Tabcorp in October 2016. The Consortium itself, on the other hand, commented on the renewed bid, saying that the offer was good for Tatts Group, as it provided the company’s shareholders with certainty and stability.
Still, no matter which one of the two rival operators’ bid is favoured by Tatts, an eventual deal would require the approval of the regulatory authorities in the country.