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PRIVATE Equity firm Kohlberg Kravis Roberts is leading a consortium which has made an all-cash $7.3 billion bid for Tatts Group (ASX: TTS) in a bid to derail its pending merger with Tabcorp.
The Pacific Consortium, which includes KKR, Morgan Stanley Infrastructure and super fund First State made the offer overnight and values the deal at $4.21 per share, which is a five per cent premium to the market price.
TTS shares closed at $4.35 on Tuesday.
The latest offer could derail an agreed $11 billion merger between Tatts and Tabcorp, which at the current share price would value Tatts at $4.20.
The merger, which would create a gaming and lotteries behemoth, is the subject of approval by the Australian competition watchdog and it's believed the Pacific Consortium offer will not require its approval.
The consortium says this new bid will give Tatts Group shareholders more certainty.
The ACCC has until mid-June to make its decision on the Tabcorp-Tatts merger and it has already thrown some doubt about its approval saying it was "likely to substantially lessen competition in the supply of monitoring and other services to pokies venues in Queensland".
Tabcorp has been making a serious effort to convince the ACCC to approve the merger and on Tuesday they agreed a deal to offload its Queensland gaming machine monitoring business, Odyssey Gaming Services, to Australian National Hotels.
The Pacific Consortium, chaired by Kerry Schott, has made it clear that it wants Tatts' lucrative lotteries business and plans to sell off it wagering arm.
Tatts makes around 63 per cent of its revenues from its lotteries business but its wagering business Ubet, which launched in April last year, has disappointed the market so far.
Tatts CEO and managing director Robbie Cooke (pictured) revealed the company's profit had been hit by soft lotteries and wagering results in its half year report in February.
Business News Australia
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