Australia: Morgan Stanley Group offers $5.5 billion for lotteries giant

A consortium including Morgan Stanley and KKR offered as much as A$7.3 billion ($5.5 billion) for Australian betting and lotteries business Tatts Group, setting up a potential bidding war with Tabcorp Holdings.

The proposal is worth between A$4.40 and A$5 for each Tatts share, the Brisbane-based company said in a statement Wednesday. The Pacific Consortium, which also includes Macquarie Group and First State Investments, plans to sell or separately list Tatts’s wagering and gaming business.

Tatts’s shares soared in Sydney trading after the bid opened the field to other potential suitors, despite Tabcorp last month seeking to ward off any counteroffers by securing a 10 percent stake in the company. The eventual buyer would gain a lotteries business that generated record earnings in its most recent fiscal year and operates in almost every Australian state.

“Tatts have phenomenal pricing power in lotteries which they have not really exploited,” said Gabriel Radzyminski, managing director of Sandon Capital, which owns Tatts shares. “It’s effectively an unregulated monopoly.”

Full Content: Bloomberg

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