It was recently revealed that the Tatts group had received a counter takeover offer from the Pacific Consortium. This came after a takeover offer from Tabcorp. With two attractive offers on the table, it has been reported that Tatts was having to seriously consider which offer to accept. However, analysts have thrown another idea into the mix, suggesting that Tatt Group should split up for the sale.
Tatts Group has two Main Parts
When we look into the Tatts Group, we can see that the company very clearly has two main parts of its business. These are the Wagering and gaming department, as well as the lottery. Coincidentally, it also has two different companies who wish to buy Tatts Group, and each of those companies specialises in different aspects.
Analysts have looked at the situation and suggested that the best course of action would be to split up the company. Tabcorp already owns 44% of the Wagering and Gaming business and would be able to easily integrate this department.
On the other hand, the lottery division would be a perfect fit for the Pacific Consortium. When Pacific Consortium first proposed the counter takeover, it had actually intended to spin off the Wagering and Gaming department. However, it has since revised its offer. It is now offering an all-cash offer for the entire Tatts Group at AU$4.21 per share. In comparison, Tabcorp is offering AU$11 billion for the merger
Battle for Tatts, not good for anyone
Another aspect to consider is that a prolonged battle is not going to be good for anyone. The Lottery Division is not likely to be a good fit for Tabcorp, who has no experience running a lottery. Tatts Group lottery has matured into a stable business with around seven million customers. It is only recently that its lotto came under threat from other operators, such as Lottoland.