UBS's equities desk is seeking to buy a 10 per cent stake in Tatts Group worth $640 million, sources told Street Talk.
It is understood the broker was calling fund managers seeking to buy 147 million shares after market on Thursday.
The broker was offering $4.35 a share, on behalf of its corporate client Tabcorp.
The stock last closed at $3.93.
The offer price was a 10.7 per cent to Tatts' last close, according to terms sent to fund managers.
The raid would be worth about $600 million.
Tabcorp and Tatts announced an $11.3 billion merger last month. The offer was subject to regulatory approval and was expected to take 12 months or more to complete.
"The transaction is intended to help facilitate the proposed combination of Tabcorp and Tatts and provide shareholders with improved financial outcomes," UBS told fund managers in a termsheet sent on Thursday afternoon.
"Tabcorp Holdings Limited ("Tabcorp") has entered into a cash-settled equity swap with UBS AG Australia Branch in respect of up to approximately 147 million shares in Tatts, representing c.10% of the Tatts shares on issue.
"To hedge its exposure under the equity swap, UBS is seeking to purchase up to approximately 147 million Tatts shares."
Fund managers were baffled as to why Tabcorp would raid, unless it was wary that there may be an interloper seeking to make a separate bid for Tatts.
