Youbet.com Agrees to Acquire International Racing Group
Tuesday February 8, 5:58 pm ET
Transaction Would Expand Scope of Youbet.com's Product Line
WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Feb. 8, 2005--Youbet.com, Inc. (NASDAQ:UBET - News), a leading online wagering company and the largest provider of Internet horse racing content in the United States, announced today that it has entered into a Letter of Intent to acquire International Racing Group (IRG), a privately-held, licensed and regulated pari-mutuel account wagering company based in Curacao, a Netherlands Antilles territory. The purchase of IRG is contingent upon certain events, including the completion of Youbet's due diligence, execution of the definitive transaction documents and the approval of Youbet's Board of Directors.
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If completed, the acquisition is expected to close in the second quarter and would be accretive to Youbet's 2005 operating results. Youbet expects to finance the transaction with cash on hand and the issuance of common stock currently held in treasury. Youbet intends to operate IRG as a separate legal entity. Additional financial details will be disclosed upon execution of the definitive purchase agreements.
IRG does not process wagers over the Internet. IRG accepts telephone wagers only; predominantly from high-volume customers. IRG has contractual agreements with the more than 90 thoroughbred, harness and greyhound tracks for which it accepts wagers. IRG had approximately $140 million and $210 million in handle (total wagers) in 2003 and 2004, respectively. IRG's success and popularity is partially attributable to its practice of employing a wager discounting program for players in exchange for their wagering volume.
While IRG is one of several companies that were recently denied a continued signal feed from the New York Racing Association (NYRA), Youbet continues to receive NYRA's racing content and therefore believes that IRG's customers will benefit from this transaction. In addition, Youbet also believes that its existing relationships with race tracks and horsemen's groups will benefit as a result of the proposed transaction.
Charles F. Champion, Youbet Chairman and CEO commented, "One of our core growth initiatives has been to expand the scope of our ADW product line through the acquisition of other pari-mutuel wagering companies that would be accretive to our operations. The acquisition of IRG, which has built up a strong and loyal customer base under the direction of Lou Tavano, would, if completed, be consistent with this goal. Lou and his management team have a deep appreciation for the horse racing industry, its regulatory process and the role that our companies can play in furthering growth in the entire industry.
John Roark, President of the National Horsemen's Benevolent and Protective Association (NHBPA) commented, "Off-track wagering is a complementary business for the horse racing segment, and the appreciation of it by industry participants should only increase as the visibility of licensed, public companies continues to grow. We believe the proposed acquisition of IRG, given Youbet's leadership in setting compliance and regulatory standards, makes this transaction one that will benefit race tracks, horsemen's groups, and the industry at large."
Youbet recently began the formation of an independent committee that will review the Company's current gaming compliance policies to ensure that the Company continues to employ "best-practices", and then report its findings to Youbet's Board of Directors. Youbet has retained Gregg Schatzman of the firm of Schatzman & Associates, a 23-year gaming industry veteran and former Chief of Investigations for the Nevada Gaming Control Board, to assist Youbet and the committee in crafting and implementing any necessary protocols to ensure that, among other items, the protocols and safeguards of acquisition targets are in line with the rigorous standards Youbet has established for its online and telephonic wagering businesses. In connection with the completion of the IRG due diligence, Mr. Schatzman will conduct a review of IRG's business operations and recommend new polices, if needed, to ensure that IRG's business operations satisfy Youbet's compliance policies. Youbet expects to add representatives from the horse racing, U.S. law enforcement and financial services sectors to the committee in the near term.
Champion continued, "As our ADW business grows and our product lines diversify, we intend to maintain a leadership role in self-regulation and compliance. To that end, we will continue to rely upon and work with outside experts like Gregg to help integrate new businesses into our current compliance programs."
Youbet.com is the largest Internet provider of thoroughbred, quarter horse and harness racing content in the United States as measured by handle data published by the Oregon Racing Commission. Members can watch and, in most states, wager on the widest variety of horse racing content available via Youbet.com's website.
Youbet.com members enjoy features that include commingled track pools, live audio/video, up-to-the-minute track information, real-time wagering information, phone wagering, race replays, simultaneous multi-race viewing and value-added handicapping products.
Youbet.com is an official online wagering platform of Churchill Downs Incorporated and the Kentucky Derby. Youbet.com operates TotalAccess(SM), an Oregon-based hub for the acceptance and placement of wagers. More information on Youbet.com can be found at
www.youbet.com.