Tabcorp to expand its Gaming Services business through the acquisition of INTECQ

Tabcorp to expand its Gaming Services business through the acquisition of INTECQ

Tabcorp Holdings Limited (ASX:TAH) (“Tabcorp”) and INTECQ Limited (ASX:ITQ) (“INTECQ”) have today announced the companies have entered into a binding Scheme Implementation Agreement, under which Tabcorp has agreed to acquire all INTECQ shares via a Scheme of Arrangement (“the Scheme”).

The Directors of INTECQ unanimously recommend that all INTECQ shareholders vote in favour of the Scheme, in the absence of a superior proposal.

INTECQ is a leading Australian gaming systems company, providing integrated gaming technology solutions, gaming management systems and Licensed Monitoring Operator (“LMO”) services to gaming venues and other businesses. INTECQ has commercial agreements with over 1,200 licensed venues and a network of more than 70,000 electronic gaming machines (“EGMs”) across Australia.

Tabcorp’s Managing Director and CEO, David Attenborough, said: “The acquisition of INTECQ presents an exciting opportunity for Tabcorp to strengthen our Gaming Services business.

“INTECQ complements our Tabcorp Gaming Solutions (“TGS”) business, providing increased scale and diversification of earnings. INTECQ’s operational and geographic footprint provides an exciting platform for accelerated growth by expanding our product and service offering to both the INTECQ and TGS customer base.

“INTECQ has a track record of innovation. We look forward to combining capabilities to strengthen our market-leading gaming and venue services offering.”

INTECQ Executive Deputy Chairman, Tony Toohey, and Acting Chief Executive Officer and Chief Operating Officer, Peter Walford, have agreed to remain with the business following completion of the acquisition. Mr Toohey and Mr Walford bring over 50 years of combined industry experience to Tabcorp.

Under the terms of the agreement, INTECQ shareholders will receive $7.15 cash for each INTECQ share held. This implies an expected enterprise value of $1151 million.

The offer price represents:

  • A 30% premium to the volume weighted average price2 since INTECQ announced an increase in expected FY16 pre-tax profit on 30 May 2016; and
  • A 31% premium to INTECQ’s last closing price on 29 July 2016.

The Directors of INTECQ intend to vote the INTECQ shares they control in favour of the Scheme, in the absence of a superior proposal.

Tabcorp intends to fund the acquisition from existing cash and bank facilities.

Tabcorp expects the acquisition will generate EBITDA of approximately $20 million in the year following completion of integration of the business. The acquisition is expected to be EPS accretive from the first year.

The Scheme is subject to certain terms and conditions, which are contained in the Scheme Implementation Agreement and include:

  • Approval from INTECQ shareholders, ASIC, the Court, gaming regulators and other regulatory approvals including ACCC approval;
  • The Independent Expert concluding that the Scheme is in the best interests of INTECQ shareholders; and
  • No material adverse change or prescribed occurrence in relation to INTECQ.

The parties have also agreed to certain exclusivity provisions and break fee arrangements as set out in the Scheme Implementation Agreement. A copy of the Scheme Implementation Agreement is enclosed with this announcement.

UBS is acting as financial adviser to Tabcorp and Allens is acting as legal adviser.

For more information:
Financial analysts: Lachlan Fitt, GM Investor Relations and Strategy, 02 9218 1414 Media: Nicholas Tzaferis, GM Corporate Affairs, 03 9868 2529

1 Based on INTECQ’s fully diluted share count of 17.9 million shares

2 Based on the volume weighted average price of INTECQ’s shares from open of trade on 30 May 2016 to close of trade on 29 July 2016

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