Centrebet hostile takeover underlines size of local online gaming market
Centrebets $20million hostile takeover for its rival, International All Sports (IAS) has underlined just how big Australian online betting has become.
At least $1.7billion in gambling turnover is involved, most of it wagered online and mostly in Australia.
But this takeover is as much a human story as a business story.
Thats because whilst both companies are corporate bookmakers, listed on the Australian Stock Exchange, they are both very much
still family businesses.
Centrebet is really Sydney based trackside bookie, Con Kafataris and his family.
Their takeover target, International All Sports (IAS) is Mark Read’s company.
Read is one of the colourful characters of Australian racing. He was originally a high-profile Melbourne trackside bookie before pioneering the move to corporate bookmaking in the Northern Territory.
The Read family still has a presence on the rails at Flemington, in the person of Read’s daugher, Kathryn, who holds a bookie’s licence in her own right.
That’s what makes the hostile takeover of IAS launched by Centrebet yesterday a battle between families as much as it is between corporations.
Moreover, the tactics are already dirty.
Read put IAS up for sale two years ago. He hoped to cash in to the tune of $100million or more. There were plenty of interested parties who signed the confidentiality and standstill agreements necessary to get a look at IAS books. And they included Centrebet.
But ultimately there were no offers and no sale.
So when Con Kafataris popped up yesterday with an offer worth less than $20million, Read was clearly unimpressed.
IAS chairman, Barry Coulter, sent a letter to the Australian Stock Exchange, saying that Centrebet’s bid “significantly undervalues the shares of IAS.”
Read and IAS are clearly upset that Centrebet has used information given to it during the sale process to frame its bid. The company has complained to the government’s takeovers panel and appears set to try and fight off the takeover.
As a first step it has foreshadowed a 100% improvement in profits when its upcoming half-yearly results are released.
IAS would want to show a big profit lift. Centrebet’s main argument why IAS shareholders should accept its offer is that IAS has had a poor profit record for years.
By contrast, Centrebet has been quite profitable in the two years or so it has been listed company, with a pre-tax profit last year of just under $15million.
However the relative profitability of Centrebet and IAS may ultimately be irrelevant if the the big boys in the Australian market decide to take an interest.
$20million would be virtual small change for market giants, TABCorp or the TATTs Group, and they may well be interested in buying out IAS at such a low price.
According to the numbers in the Centrebet offer, IAS has around 39,500 customers for itsIASbet.com and Canbet.com operations.
IASBet.com’s core Australian wagering business is profitable, and turned over $524million in the financial year to June 2008.
The Canbet.com business it bought in 2004 has however, been a lossmaker. Its internationally focussed business suffered from the US ban and it has still to recover, even though it appears to still be growing and turned over some $214million last year.
IAS also owns the Austote.com operation licensed by the Norfolk Island Gaming Authority.
For more information go to
www.centrebet.com
www.canbet.com
www.iasbet.com
www.ckbookmaker.com
www.sportodds.com
www.austote.com
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