In morning trade one of the worst-performing shares has been lottery operator Tatts Group Limited (ASX: TTS) which sank lower by over 4% to $4.35.
That decline came after the company announced that its board had determined that the Pacific Consortium's takeover proposal was not superior to the proposed merger with Tabcorp Holdings Limited (ASX: TAH).
The Pacific Consortium, led by Macquarie Group Ltd (ASX: MQG), had made an offer equating to between $4.40 and $5.00 per share.
This was based on a cash offer of $3.40 per share and one share in the wagering & gaming business (it would then relist) valued at between $1.00 and $1.60 per share.
The board stated that:
"The Indicative Proposal is predicated on a number of key assumptions (see below) that are either incorrect, inconsistent with Tatts' current expectations or unknown, and Tatts is unable to assess what impact, if any, these factors might have on the terms and conditions of the Indicative Proposal."
As a result the Tatts board has said that it is unable to grant the Pacific Consortium due diligence or otherwise engage in discussions regarding the proposal.
End of the matter? Never say never, but judging by the sell-off today the market doesn't appear to expect a better offer from the consortium.
I agree with the board on this one – that as things stand the merger with Tabcorp will create greater value for shareholders. So I'm pleased to see the board take this stance.
But I wouldn't necessarily rush into buy its shares now. At almost 24x forward earnings I think Tatts is a little on the expensive side and investors can find greater value elsewhere in the market.
