Kentucky Derby track owner to buy Youbet.com
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Burbank-based online horse-betting firm Youbet.com Inc. said Wednesday that it agreed to a buyout by racetrack owner Churchill Downs Inc., which also controls a rival online-betting operation.
The cash-and-stock deal is worth $127 million, though Youbet.com shareholders are getting a price well below their stock’s recent peak.
With attendance at racetracks on the decline, the merger is a bet that more people can be enticed to play the ponies online, says my colleague Nathan Olivarez-Giles, who wrote a profile of Youbet.com for The Times last week.
Together, Churchill (via its TwinSpires.com website) and Youbet.com will control about half of the online horse-betting market, Olivarez-Giles says.
Louisville, Ky.-based Churchill, which owns the racetrack that hosts the Kentucky Derby as well as other tracks in Florida, Illinois and Kentucky, agreed to pay 97 cents a share in cash for each Youbet.com share, plus 0.0598 shares of Churchill stock.
Based on Churchill’s closing stock price of $31.57 on Wednesday, that works out to a value of about $2.86 a share.
That price is a premium of 19% above Youbet.com’s closing share price of $2.41 on Wednesday, when the shares gained 19 cents, or 8.6%, for the day. The deal was announced after markets closed.
But Youbet.com shares had reached a 2 1/2-year high of $3.72 in late July, before tumbling in August.
Churchill and Youbet.com said their marriage would allow the combined firm ‘to pursue other online business opportunities beyond pari-mutuel wagering, should such opportunities develop.’
Youbet.com earned $878,000 on sales of $27.9 million in the third quarter. Churchill lost $2.3 million on sales of $101 million, but the company makes most of its money each year in the spring quarter.
-- Tom Petruno