Churchill Downs buying YouBet
DiscreetCat
Moderator
from Bloodhorse:
Churchill Downs Inc. is expanding its presence in the advance deposit wagering market with the purchase of Youbet.com for $126.8 million.
CDI and Youbet.com, in a release issued after the close of the market Nov. 11, said they have entered into a definitive merger agreement under which CDI would acquire all of the outstanding shares of Youbet.com.
Under the terms of the transaction, Youbet.com shareholders would receive a fixed ratio of 0.0598 shares of CDI common stock plus $0.97 in cash for each share of Youbet.com common stock they own, subject to possible future adjustment to the exchange ratio in very limited circumstances to increase the cash consideration and correspondingly decrease the stock consideration, in order to ensure that the transaction does not require CDI to issue more than 19.6% of its outstanding common stock prior to the transaction.
After the close of the transaction, Youbet.com shareholders are expected to own about 16% of CDI, officials said.
The deal includes United Tote, a Youbet.com subsidiary. Its customers include Churchill Downs, Keeneland, and the New York Racing Association tracks.
We believe this combination should enable us to accelerate the development of new technology-enabled features and services that horse racing customers who wager via the ADW channel want and that can attract new customers to racing, CDI president and chief executive officer Robert Evans said in a statement. While we expect to make many exciting improvements for customers, our existing TwinSpires.com customers will be able to continue to access their accounts and make wagers, deposits, and withdrawals in the same manner they do today.
We believe that the anticipated additional growth in our ADW channel handle and revenue, coupled with the expected cost synergies, make this transaction a good way to deliver additional value to CDI and Youbet shareholders.
Evans indicated the tote acquisition is important.
Concerns about the financial viability and stability of tote system providers and the need to improve the integrity of tote system wagering are well-established, he said. By acquiring United Tote, CDI hopes to be able to directly address those problems and utilize the United Tote technology to improve tote system stability, performance, and integrity.
If the deal goes through, CDI would become the second racetrack company to own a tote system. Magna Entertainment Corp. owns AmTote, and also the XpressBet.com ADW service.
CDI officials said recent statistics suggest less than 14% of all wagering on United State Thoroughbred racing is done online. The company said it believes the percentage will continue to grow, consistent with trends toward online transactions in other consumer industries.
CDI, which launched the TwinSpires.com ADW platform several years ago, already has purchased the AmericaTAB and Brisnet.com account wagering services.
According to the release, a projected $10 million in annual cost savings is possible by combining the two companies. Money would be saved by eliminating the duplicate costs of operating two public companies, duplicate sales, general, and administrative costs, and duplicate costs of developing and operating two ADW platforms.
We are excited about what this opportunity to combine Youbet with CDI will mean for Youbet customers, shareholders, and employees, Youbet.com president and CEO David Goldberg said in a statement. Youbets customers will be able to continue to access their accounts and make wagers, deposits and withdrawals as they do today. We believe these capabilities will complement CDIs strong customer relationship with core racing fans.
Upon completion of the transaction, in the first or second quarter of 2010, Youbet.com executive chairman Michael Brodsky will join the CDI board of directors, officials said.
Churchill Downs Inc. is expanding its presence in the advance deposit wagering market with the purchase of Youbet.com for $126.8 million.
CDI and Youbet.com, in a release issued after the close of the market Nov. 11, said they have entered into a definitive merger agreement under which CDI would acquire all of the outstanding shares of Youbet.com.
Under the terms of the transaction, Youbet.com shareholders would receive a fixed ratio of 0.0598 shares of CDI common stock plus $0.97 in cash for each share of Youbet.com common stock they own, subject to possible future adjustment to the exchange ratio in very limited circumstances to increase the cash consideration and correspondingly decrease the stock consideration, in order to ensure that the transaction does not require CDI to issue more than 19.6% of its outstanding common stock prior to the transaction.
After the close of the transaction, Youbet.com shareholders are expected to own about 16% of CDI, officials said.
The deal includes United Tote, a Youbet.com subsidiary. Its customers include Churchill Downs, Keeneland, and the New York Racing Association tracks.
We believe this combination should enable us to accelerate the development of new technology-enabled features and services that horse racing customers who wager via the ADW channel want and that can attract new customers to racing, CDI president and chief executive officer Robert Evans said in a statement. While we expect to make many exciting improvements for customers, our existing TwinSpires.com customers will be able to continue to access their accounts and make wagers, deposits, and withdrawals in the same manner they do today.
We believe that the anticipated additional growth in our ADW channel handle and revenue, coupled with the expected cost synergies, make this transaction a good way to deliver additional value to CDI and Youbet shareholders.
Evans indicated the tote acquisition is important.
Concerns about the financial viability and stability of tote system providers and the need to improve the integrity of tote system wagering are well-established, he said. By acquiring United Tote, CDI hopes to be able to directly address those problems and utilize the United Tote technology to improve tote system stability, performance, and integrity.
If the deal goes through, CDI would become the second racetrack company to own a tote system. Magna Entertainment Corp. owns AmTote, and also the XpressBet.com ADW service.
CDI officials said recent statistics suggest less than 14% of all wagering on United State Thoroughbred racing is done online. The company said it believes the percentage will continue to grow, consistent with trends toward online transactions in other consumer industries.
CDI, which launched the TwinSpires.com ADW platform several years ago, already has purchased the AmericaTAB and Brisnet.com account wagering services.
According to the release, a projected $10 million in annual cost savings is possible by combining the two companies. Money would be saved by eliminating the duplicate costs of operating two public companies, duplicate sales, general, and administrative costs, and duplicate costs of developing and operating two ADW platforms.
We are excited about what this opportunity to combine Youbet with CDI will mean for Youbet customers, shareholders, and employees, Youbet.com president and CEO David Goldberg said in a statement. Youbets customers will be able to continue to access their accounts and make wagers, deposits and withdrawals as they do today. We believe these capabilities will complement CDIs strong customer relationship with core racing fans.
Upon completion of the transaction, in the first or second quarter of 2010, Youbet.com executive chairman Michael Brodsky will join the CDI board of directors, officials said.