With This Rose: CDI Has Deal To Acquire Youbet.com For $126.8M

CDI Would Become Second Racetrack Company To Own Tote System If Deal Goes Through

Churchill Downs Inc. (CDI) and Youbet.com have entered into a merger agreement under which CDI will acquire all outstanding shares of Youbet for approximately $126.8M. Youbet shareholders will receive a fixed ratio of 0.0598 shares of CDI common stock, as well as $0.97 for each share of Youbet stock they own (CDI). BLOODHORSE's Tom LaMarra noted the deal includes Youbet subsidiary United Tote, whose customers include Churchill Downs, Keeneland Race Course and NYRA tracks. If the deal goes through, CDI would become the "second racetrack company to own a tote system." Magna Entertainment Corp. owns AmTote, as well as XpressBet.com and ADW service. CDI officials said that "recent statistics suggest less than 14% of all wagering on United States Thoroughbred racing is done online," adding that they believe that percentage "will continue to grow, consistent with trends toward online transactions in other consumer industries." CDI, which launched TwinSpires.com in '07, already has purchased account wagering services AmericaTAB and Brisnet.com (BLOODHORSE.com, 11/11).

PICKING UP THE PACE: CDI Exec VP & CFO Bill Mudd yesterday said the deal provides CDI with a "bigger entry into account wagering." He added the acquisition is the "best way to reach the customer and improve the customer experience for our horse racing fan.” CDI COO Bill Carstanjen said that the companies "hope to complete the transaction in the first half of next year." Mudd said that savings estimated at $10M were a "major factor in the deal." The first $5M would be "within the first few months after the closing," with the second half "to be seen within the first year after the closing." Mudd noted that there will be "some savings from personnel but did not provide any specifics." Both Youbet and TwinSpires will "continue as is for the time being, but Mudd declined to say whether the services would be combined after the deal closes" (Louisville COURIER-JOURNAL, 11/12). CDI President & CEO Bob Evans yesterday said that the company plans to leave California-based Youbet "running as an independent company and has no plans to move the company to Louisville" at the moment (L.A. TIMES, 11/12).