SYDNEY (Reuters) - Australian lottery operator Tatts Group (AX:TTS) on Friday said a A$6.15 billion (3.56 billion pounds) cash takeover offer from a consortium backed by U.S. private equity giant KKR & Co (N:KKR) was not superior to a cash-and-scrip bid from Tabcorp Holdings (AX:TAH).
"In these circumstances, Tatts is unable to provide due diligence or engage with the Pacific Consortium," the company said in a statement.
The Tabcorp bid valued Tatts at A$4.249 at the close of trade on Thursday, compared with the A$4.21 price of the offer from Pacific Consortium.
Pacific Consortium also includes Macquarie Group Ltd (AX:MQG), Morgan Stanley (NYSE:MS) Infrastructure and First State Superannuation Scheme. Tatts in December rejected an initial proposal from the group.
Tatts and Tabcorp in October said their agreed merger would offer A$130 million a year in synergies.
Under the terms of that deal, Tatts is restricted from engaging in discussions with a rival suitor or providing due diligence access unless it determines the competing proposal would be reasonably expected to result in a superior offer to the Tabcorp bid.
Tatts is a prized asset given the lucrative and reliable earnings from its lotteries business, which benefits from monopoly licences. It also owns a smaller wagering business that competes against Tabcorp, the nation's largest betting operator.