Firm buying Unitab

Thursday, Oct. 16, 2003 | 9:08 a.m.

SYDNEY, Australia -- Tab Ltd. agreed Tuesday to buy Unitab Ltd. to create Australia's largest wagering company with more than 3,000 outlets taking bets on horse and greyhound racing. The deal values Unitab at about A$925 million (U.S. $635 million).

Tab shareholders will own about 75 percent of the new company, which will retain Unitab's name and be based in Queensland, Unitab's home state. Unitab investors will receive A$7 a share for half their shareholding and keep the rest as stock in the new company.

The takeover is the latest in Australia's A$15 billion wagering and gaming industry that may lead to three of the five biggest gaming companies being swallowed by Tab Ltd., Tabcorp Holdings Ltd. and Publishing & Broadcasting Ltd. Sydney-based Tab and Unitab are restricted from opening betting shops in other states, and government limits on slot machines have slowed sales.

"There's only so much of the gaming dollar these companies can take, so there aren't many opportunities for growth," said Paul Xiradis, who oversees the equivalent of $756 million at Ausbil Dexia Ltd. in Sydney. "By amalgamating operations there are opportunities to generate cost savings and greater cash flow for shareholders."

The combined company will have betting shops in New South Wales, Queensland, South Australia and the Northern Territory. Australian adults spent an average A$128 each on horse and greyhound betting in the 12 months ended June 30, 2002, according to the Tasmanian Gaming Commission.

The new company will also have 115,000 slot machines, the most popular form of gambling in Australia.