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Tattersalls May Strengthen Bid for UNiTAB
Tattersall's "keeps options open" on bid for UNiTAB, prepared to wait out the legislative and regulatory approvals rival Tabcorp needs.
In the face of an aggressively-priced and unsolicited counter-bid by wagering industry leader Tabcorp for second-ranked UNiTAB, Tattersall's had at first merely reiterated the benefits of its "merger of equals" proposal. Now, Managing Director Duncan Fischer is quite prepared to take a more forceful approach. "Obviously as this thing unfolds, if it goes any further, we will be keeping all our options open, and there are a whole multitude of options and you can all guess what they would be."
This was taken to mean that Mr. Fischer refused to rule out improving the terms of its bid, specifically the underlying price. Backed by "safety-net" provisions for the target company Board of Directors and "key executives", the Tattersall's offer was to swap 4.33 of their stock for every one of UNiTAB's. This is of course vulnerable to how the market values Tattersall's itself. At the close of mid-week trading, Tattersall's cash and share offer valued UNiTAB at A$12.74 a share compared with Tabcorp's offer at A$14.25. Both suitors fell short of the UNiTAB closing price, A$14.79.
On the other hand, Tattersall's has the unanimous support of the UNiTAB Board. Furthermore, independent expert Deloitte Corporate Finance has put the fair market value of the Tattersall's package as being $13.86 to $15.16 per UNiTAB share. If the upper end of the range is realized, this could give the UNiTAB Board the premium over current stock price needed to swing the shareholder meeting re-set for late next month.
His confidence bolstered on both counts, Mr. Fischer went on to reject speculation that Tattersall's may well partner with Tabcorp to jointly acquire UNiTAB and proceed to split the assets afterward. For one, he pointed out, Tabcorp has yet to earn the nod of both the Queensland state government and the Australian Competition and Consumer Commission. Though the government has already released a set of six conditions it wants fulfilled, Tabcorp Chief Executive Officer Matthew Slatter would do nothing momentarily beyond expressing delight at learning what was required.
One of the sticking points is the Queensland law which requires that UNiTAB's wagering operations keep their head office in the state. Tattersall's assented completely to this while Tabcorp would only say so far that it planned a shared services office in Queensland.
Mr. Fischer also scoffed at the notion of UNiTAB turning around and bidding to acquire Tattersall's itself later on, if the merger did not eventuate. After all, he stated, anyone wanting to acquire more than a 10 percent holding in Tattersall's must seek approval from the state government of Victoria.
In the end, the initiative appears to be with Tattersall's. Mr. Fischer has until the July 26 special UNiTAB shareholders meeting to raise the stakes. And if the ACCC does decide against the Tabcorp offer on July 19, Tattersall's and UNiTAB would be free to pursue their merger as originally planned.
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