I know that a lot of water has passed under the bridge since this proposed merger was first announced back in October 2016, and I accept that I haven't been watching TTS as closely as I should have, but I was shocked when I read a summary of the transaction details released on Friday.
The initial documentation provided for TTS shareholders to receive 0.80 Tabcorp shares plus 42.5 cents for each TTS share held, plus a fully franked dividend of 20 cents with an 8.6 cents franking credit - a total of 71.1 cents per share. The latest documentation presents a totally different picture: The 0.80 Tabcorp shares remain, plus the 42.5 cents, but the ff dividend has been watered down to 12 cents plus 5 cents franking credit. The sting in the tail is that the Cash Consideration (i.e. the 42.5 cents) is to be reduced by the amount of the special dividend, which effectively wipes the value of the ff dividend (17 cents). This produces a cash payment of only 42.5 compared to the original 71.1 cents.
I would have assumed that with the brief interest from a second party in acquiring TTS, that the offer may have been improved, not reduced by 40%. Have I got this wrong, or have I just been asleep at the wheel? What was the justification for the sharp reduction in payment?
TTS Price at posting:
$3.91 Sentiment: Hold Disclosure: Held
