TATTS REJECTS PACIFIC CONSORTIUM OFFER (Update)
Will Pacific respond by upping the ante?
Australian gambling group Tatts announced Friday that it has rejected an acquisition offer from the Pacific Consortium in favor of a prior merger offer from rival betting group Tabcorp.
The Tatts statement observed that in rejecting the offer it wouldn’t allow the Pacific Consortium to go through its books or engage in discussions over the group’s buy-out offer of up to A$7.34 billion.
In response, a Pacific Consortium spokesman said the group was reviewing its position, as well as a “material profit downgrade” by Tatts.
In its statement Friday, Tatts revealed that EBITDA is expected to fall 14 percent year- on-year for the lotteries part of its business to about A$153 million due to a recent run of "unfavorable jackpots."
Our readers will recall that the Pacific Consortium is mainly interested in Tatts' lottery business, and has indicated that it would probably sell off the UBET wagering side of the company if its bid was successful.
Tatts described Pacific's valuation of its lottery business as "inadequate" and its business assumptions regarding the wagering component as "overly optimistic."
In its statement rejecting the Pacific offer, Tatts contended that the "total value" of the Pacific proposal did not present an opportunity that was "superior to the proposed Tabcorp merger" and asserted that even if Pacific were to up its offer it would "make the same determination."
Whether that will remain the case if Pacific does up the ante – which analysts predict will be the case – remains to be seen.