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Tatts rejects Pacific offer, Tabcorp merger still on track

Tue, Dec 27, 10:30am by Staff Writer

The intended marriage of gaming and wagering giants Tatts and Tabcorp remains firmly on the table with Tatts all but rejecting a bid from a consortium led by Macquarie.

Tabcorp and Tatts announced they were proceeding with a merger earlier this year in a move which would create an $11 billion super power in the Australian gambling landscape.

However a shock move for Tatts by the Pacific Consortium, led by Macquarie banker Michael Burn and involving several large infrastructure investors, was set to scuttle the arrangement.

A takeover bid would see the likely break-up off the Tatts business, with Pacific Consortium saying they were only really interested in the lotteries aspect of Tatts.

It intended to sell off the wagering arm, which includes the retail business U-Bet, which holds racing wagering licenses in South Australia and Queensland.

While those businesses have obvious synergies with Tabcorp’s current business, Tabcorp made it clear that it wasn’t interested in a spare parts purchase of Tatts.

While on the surface, the Pacific Consortium bid was superior in terms of a price per share, Tatts last week rejected the move, forcing PC to go back to the drawing board.

Tatts chairman Harry Boon said the proposal made key assumptions which are ‘either incorrect, inconsistent with Tatts’ current expectations or unknown’.

The AFR has reported that the key sticking point came with value of the wagering business by Pacific, which was based on the assumption it would be able to on-sell it to Tabcorp or another party which could realise $130 million in synergies.

Boon said there is no clear guarantee of $130 million in synergies, especially given Tabcorp’s statement that they would not bid on pieces of the Tatts business.

AFR reports that Pacific has been talking to other potential buyers for the wagering business, believed to be major overseas players such as Paddy Power and William Hill.

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