Churchill Downs Buys Youbet.com For $126 Million
Churchill Downs Inc. (CDI), home of the Kentucky Derby, has agreed to buy online horse wagering firm Youbet.com in a cash-and- stock deal valued at $126.8 million.
The deal would give Churchill Downs over $700 million worth of the $1.4 billion online horse wagering market. Churchill Downs already owns online horse betting site TwinSpires.com.
The deal will give Youbet shareholders 97 cents a share in cash for each Youbet.com share, plus 0.0598 shares of Churchill Downs stock. Based on the closing price of Churchill stock on Tuesday, the transaction represents a per-share value of Youbet stock of about $2.84. Once the deal closes, Youbet shareholders will own 16 percent of Churchill stock.
Churchill says less than 14 percent of all wagering on U.S. Thoroughbred racing is estimated to be placed online, but it anticipates that percentage will continue to grow.
"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 Advanced Deposit Wagering channel want, and that can attract new customers to racing, said Robert L. Evans, Churchill President and Chief Executive Officer.
"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."
Churchill said the deal will result in annual saving of $10 million. The transaction is scheduled to be completed in the second quarter of 2010.