By Robb M. Stewart

MELBOURNE, Australia--Tatts Group Ltd. (TTS.AU) won't open its books to a rival takeover bid from a group of investors that includes private-equity firm KKR & Co. (KKR) and Australian bank Macquarie Group Ltd. (MQG.AU).

The wagering and lotteries company said Friday it had concluded the unsolicited 7.34 billion Australian dollars (US$5.31 billion) offer from the group known as Pacific Consortium isn't superior to a proposed merger with rival Tabcorp Holdings Ltd. (TAH.AU).

The consortium's offer was based on a number of assumptions that Tatts said were either incorrect or inconsistent with its own current expectations. It added the value the consortium ascribed to its wagering and gaming business, which it planned to either float or sell, was inadequate.

Tatts' board continues to believe the planned deal with Tabcorp is in the best interest of shareholders and unanimously recommends the deal, in the absence of a superior offer. Directors said they wouldn't allow the consortium the opportunity to conduct due diligence or engage it in discussions over its indicative and nonbinding offer.

KKR, Macquarie, Australian pension fund First State Superannuation Scheme and Morgan Stanley, as an adviser and manager to North Haven Infrastructure Partners II LP, earlier this month made an offer worth between A$4.40 and A$5.00 a share for Tatts. The companies plan to split the wagering and gaming business from the lottery business.

Under Tabcorp's offer, Tatts shareholders would receive 0.80 Tabcorp sharesand A$0.425 in cash for each share held in Tatts, which implied a value of A$4.34 a share. Tabcorp already has a 10% stake in Tatts, which it acquired last month.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

December 22, 2016 18:31 ET (23:31 GMT)

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