Bidding heats up for Australian firm

Monday, Feb. 23, 2004 | 9:07 a.m.

BLOOMBERG NEWS

MELBOURNE, Australia -- Tabcorp Holdings Ltd., Australia's biggest gaming company, today offered A$2.03 billion ($1.57 billion) in cash and stock for Tab Ltd., betting a larger cash payment and the support of the New South Wales racing industry will beat a higher bid by Unitab Ltd.

Tabcorp is offering A$2 cash and between 0.2 and 0.22 a share for each share of Sydney-based Tab, valuing the stock at A$4.50 each, Melbourne-based Tabcorp said in a statement. Brisbane-based Unitab's offer values Tab at A$4.65 a share based on Friday's closing prices and includes A$1.45 of cash for each Tab share.

Tabcorp Chief Executive Matthew Slatter is seeking to expand outside the company's home state of Victoria, where government restrictions on slot machines and smoking bans in gaming venues have slowed sales growth. Buying Tab will create a company with 18,000 slot machines, betting shops in Australia's two biggest states and four casinos.

Earlier today, Tabcorp said it won the support of the New South Wales racing industry group, NSW Racing Pty, after agreeing to pay more fees to the organizers of the state's horse, harness and greyhound track races.

Tabcorp will pay the industry an extra A$30 million during the next four years and at least A$12 million a year after 2008, it said. In addition, Tabcorp will share with the industry profit made on the sale of Tab's gaming businesses.

The New South Wales state government has said it won't ratify legislation to allow a takeover of Tab unless the racing industry supported it. Unitab said its latest proposal to the racing industry was rejected.

In an interview, Unitab Chief Executive Dick McIlwain said he plans to proceed with his bid. "If we succeed in getting Tab shareholder support, we will then own the company," he said. "We think we can easily convince the New South Wales government that it's in the Tab Ltd. shareholders interest to accept our bid and it's also in New South Wales Racing's interest."