Centrebet in hostile takeover bid for Oz rival IAS 12/02/2009

Stephen Carter

Centrebet has launched an AU$18.6m (US$11.7m) hostile takeover bid for fellow online Australian bookmaker International All Sports (IAS), which it believes will enable it to establish itself as one of the largest corporate bookmakers in Australia. The cash offer will increase to AU$29.91m (US$18.8m) if it manages to acquire more than 90% of the issued share capital.

In a letter to IAS shareholders, Centrebet’s chairman, Graham Kelly, described the offer as “an extremely attractive opportunity” to "exit a poorly performing company”. Centrebet added that it believed IAS’ ability to compete effectively, profitably and pay dividends going forward would be undermined by aggressive competition from larger domestic and international online wagering companies, the adverse impact of the introduction of product fees in Australia and prevailing economic conditions.

But although IAS shares initially rocketed 87.5% on the news, the board of IAS responded by calling on shareholders not to take any action, saying it had refused Centrebet’s request to release it from the confidentiality and standstill obligations entered into last year when Centrebet became involved in the proposed sale of its IASBet Australian bookmaking arm.

The strong performance of the company’s IASBet operation relative to its loss-making CanBet non-Australian operation is thought to be behind the directors’ stated belief that the proposal “significantly undervalues the shares of IAS.” While CanBet’s AU$8m loss for the year to June 2008 dragged the company to an overall loss of AU$3.8m, IASBet posted a 21.3% growth in turnover and a 56.9% increase in EBITDA.

The Australian Government Takeovers Panel subsequently confirmed it had received a request from Centrebet to release it from the obligations under the earlier agreement with IAS “as they are anti-competitive and frustrate the making of a genuine takeover bid for IAS.”

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Posted: 12/02/2009