(Adds details from Tabcorp announcement, more on deal value)
By Jamie Freed
SYDNEY, Nov 25 (Reuters) - Australia's Tabcorp Holdings TAH.AX on Friday said it had purchased control of around 10 percent of its takeover target Tatts Group for A$638 million.
The shares were bought at an average A$4.34 each through a cash-settled equity swap with UBS that gives Tabcorp voting rights subject to certain conditions, the company said.
A source familiar with the situation told Reuters that the share purchase was meant to make it harder for an interloper to break up an agreed merger between the pair.
Tabcorp, Australia's biggest bookmaker, last month agreed to acquire lottery operator Tatts TTS.AX for A$6.4 billion to create a gambling powerhouse in an effort to fend off a growing challenge from overseas online rivals. merger, which remains subject to approval from Australia's competition regulator, is being done via a scheme of arrangement. That will require the approval of 75 percent of Tatts shareholders.
Tabcorp, the smaller of the two companies by market value, will offer 0.8 Tabcorp share plus A$0.425 in cash for each Tatts share. That implies a value of A$4.09 based on the last closing price of Tabcorp.
Tatts shares closed at A$3.93 on Thursday.