In Australia, online gaming and wagering provider CentreBet International Limited has launched a takeover bid for one of its main domestic rivals, International All Sports (IAS).
The deal reportedly worth $11.8 million funded by cash and an existing debt facility could create an online sports and racing wagering company with nearly 125,000 direct customers.
IAS, led by majority sharehhholder Mark Read, was put up for sale last year but was unable to find a buyer until Centrebet lobbed an unexpected bid on Monday.
The deal would see CentreBet pay almost 18 cents per share in order to gain a 50.1 percent share of IAS. However, CentreBet is reportedly willing to go as high as 20 cents per share for 90 percent stake, which would see the eventual total price rise to $13.8 million.
The Chairman for CentreBet, Graham Kelly, told The Australian newspaper that his company would not hesitate to tap its current three-year debt facility, which has a floating-rate repayment level. He stated that CentreBet is expected to repay $634,411 a quarter.
'Even after the transaction, our balance sheet is very strong and ours is a very strong cashflow,' said Kelly.
CentreBet is Australia’s largest trackside bookmaker and revealed that its business has so far escaped the worst of the current global economic downturn and the resulting reduction in discretionary consumer spending.
'I was around in the 1980s and the early 1990s and what I remember of the racetrack on-course business was that it was affected,' said Con Kafataris, Chief Executive Officer for CentreBet.
'We have not seen the impact of it in Australia. Our business is still growing and we have an increased market share that we are taking from other competitors.'
If approved by shareholders, the deal would increase CentreBet's exposure to horseracing wagering, which now makes up 35 percent of its business.