The Tatts board told shareholders that it had assessed the revised $4.21 per share bid from Pacific Consortium and decided it would not proceed with the deal.
"Tatts board has determined that the revised indicative proposal is not a superior proposal and cannot reasonably be expected to result in a superior proposal when compared to the proposed Tabcorp merger," the company says in a statement to the ASX.
"In these circumstances, Tatts is unable to provide due diligence or engage with the Pacific Consortium.
"Accordingly, Tatts Board continues to believe that the proposed Tabcorp merger is in the best interests of Tatts shareholders and unanimously recommends the proposed Tabcorp merger."
Analysts had suggested the Tatts board would grant access to its books especially as Perpetual, which owns an 8 per cent stake in Tatts, indicated they thought the revised bid was good enough to allow due diligence.
The Tatts board made up its mind after taking advice from its legal and financial advisers. The board says its decision was largely based on the fact that the revised offer of $4.21 per share was well below the current market value of $4.47 at the close of trading on April 27.
The Pacific Consortium which includes Kohlberg Kravis Roberts, Morgan Stanley and Macquarie Group last week offered a $7.2 billion cash offer for Tatts after a previous bid had been rejected by the Tatts board in December.
Pacific Consortium will now need to resubmit a superior bid to the Tatts board but will have to move quickly as the proposed Tabcorp merger will be decided by the competition watchdog in May.
The proposed $11 billion merger between Tabcorp and Tatts will be heard in hearings at the Australian Competition Tribunal in May with a decision expected by June.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support