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JUPITERS LIMITED
ABN 78 010 741 045
Level 9, Niecon Tower
17 Victoria Avenue
PO Box 1400
Broadbeach QLD 4218
Australia
Telephone 07 5584 8900
Facsimile 07 5538 6315
05 March 2003
MERGER OF JUPITERS AND TABCORP
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Jupiters Limited ("Jupiters") and TABCORP Holdings Limited ("TABCORP") today
announced a proposal to merge and have agreed an exclusivity period to negotiate
a Merger Implementation Agreement and to undertake reciprocal due diligence.
The merger will be subject to the approval of the Treasurer of Queensland.
MERGER TERMS
The Board of Jupiters is pleased to recommend the proposed merger on the
following agreed terms.
Jupiters' ordinary shareholders will receive on average from TABCORP:
- - 24 TABCORP shares; and
- - $285.00 cash
for every 100 Jupiters' ordinary shares they own.
Jupiters' ordinary shareholders will receive from Jupiters:
- - A proportion of Centrebet sale proceeds (described below); and
- - A fully franked special dividend of $0.75 cash per Jupiters' ordinary
share.
The special dividend will have attached franking credits of approximately
$0.32 per Jupiters' ordinary share but will be subject to receiving a
satisfactory tax ruling.
The merger proposal for ordinary shareholders implies a value of $6.06 (based on
the volume weighted average price of TABCORP shares traded on the Australian
Stock Exchange in the three months to the date of this announcement ($10.26)).
In addition, Jupiters' ordinary shareholders will receive the value of the
franking credits and the value of their proportion of the Centrebet sale
proceeds described below.
Holders of Jupiters' reset preference shares will be offered:
- - $105.26 cash for each preference share, plus accrued dividends.
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CENTREBET
Jupiters will undertake a trade sale, IPO or demerger of the Centrebet business.
As Centrebet does not fit with TABCORP's international growth priorities and
strategic direction, both parties have agreed that value for Jupiters' ordinary
shareholders can be maximised by divesting the Centrebet business prior to the
merger. Accordingly, Jupiters' ordinary shareholders will share in the value
realised from the divestment of Centrebet on a pro-rata basis. The merger of
Jupiters and TABCORP is not conditional on the divestment of Centrebet.
SHARE / CASH MIX VARIATION
A mechanism will be provided for Jupiters' ordinary shareholders to apply to
receive a different proportion of TABCORP shares or cash (excluding the special
dividend) in their consideration, subject to a maximum cash pool of
approximately $574 million and a maximum share pool of approximately 48.4
million shares. Both pools are subject to adjustment as a result of conversions
of Jupiters' reset preference shares.
BENEFITS TO JUPITERS' SHAREHOLDERS
Mr Lawrence Willett, Chairman of Jupiters, said "TABCORP's offer provides
Jupiters' shareholders with fair consideration for their shares in Jupiters. It
allows shareholders to realise approximately 60% of their holdings in cash,
while the share consideration will allow them to participate in an enlarged and
more diversified gaming company."
"To the extent that Jupiters' shareholders receive TABCORP ordinary shares or
choose to reinvest gross cash consideration into TABCORP ordinary shares, they
are expected to benefit from a substantial uplift in annual dividends. Based on
annual dividends (annualised using the last interim dividends declared) of 22
cents per Jupiters' ordinary share and 66 cents per TABCORP ordinary share, a
Jupiters' ordinary shareholder who reinvests the gross cash proceeds from the
merger (excluding any proceeds from Centrebet) would receive an increase in
annual dividends of approximately 80% per Jupiters' ordinary share."
BENEFITS TO TABCORP'S SHAREHOLDERS
Commenting on the merger, Mr Matthew Slatter, TABCORP's Managing Director and
Chief Executive Officer, said " I am pleased we have been able to agree on
merger terms with Jupiters that will further enhance TABCORP's position as
Australia's pre-eminent gambling and entertainment company".
"Importantly, the merger is expected to be earnings per share accretive (pre
goodwill amortisation) in the first full year from the date of the merger and
TABCORP's strong track record of increasing dividends on an annual basis is
expected to be enhanced. In the medium term, we believe that significant value
can be created for TABCORP's shareholders arising from synergies within the
merged entity, increased scale and business diversity and enhanced financial
strength."
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BENEFITS TO QUEENSLAND
Mr Slatter also said "We are excited by the opportunity to substantially expand
our operations into Queensland. Queensland's underlying economic growth
prospects, particularly in the Gold Coast to Brisbane corridor, are outstanding.
We look forward to combining our core casino and gaming skills with those of
Jupiters to further enhance the appeal of these operations for customers and for
the benefit of all stakeholders and Queensland generally. I am pleased to
welcome approximately 5,000 Queensland employees of Jupiters to the enlarged
TABCORP group".
"Upon completion of the merger, the merged entity's casino management group will
be based on the Gold Coast. There is no doubt that Conrad Jupiters is an icon of
the Gold Coast and we will promote the casino and the soon to be completed
convention centre throughout Australia and internationally to further enhance
tourism to the Gold Coast and Queensland generally".
THE MERGED ENTITY
The merged entity is expected to have annual earnings before interest, tax,
depreciation and amortisation of more than $700 million, and combined with an
investment grade credit rating, will be well positioned to pursue growth
opportunities in other parts of Queensland, Australia and abroad.
The merged entity would operate Australia's leading gambling and entertainment
businesses. This would include operating approximately 18,000 gaming machines
and Keno operations on the east coast of Australia; four casino and hotel
facilities - Star City, Conrad Jupiters, Conrad Treasury and Jupiters Townsville
and off course wagering and sportsbetting operations in Victoria - the home of
Australian racing.
Mr Michael Robinson, TABCORP's Chairman, said "Upon completion of the merger, we
look forward to offering two Board seats to current members of the Jupiters'
Board and are delighted that Mr Lawrence Willett AO, Chairman of Jupiters, and
Mr John Story have agreed to join the TABCORP Board. Both Mr Willett and Mr
Story further enhance the TABCORP Board's experience and knowledge of the gaming
and entertainment industry, particularly in Queensland, further strengthening
the merged company".
MERGER IMPLEMENTATION AND CONDITIONS
It is proposed that the merger would be implemented by TABCORP acquiring all of
Jupiters' ordinary shares and reset preference shares by way of schemes of
arrangement. The scheme of arrangement in relation to the reset preference
shares will be conditional on approval of the scheme of arrangement in relation
to the ordinary shares but not vice versa.
The merger is also subject to satisfactory completion of reciprocal due
diligence by Jupiters and TABCORP, execution and performance of a Merger
Implementation Agreement, receipt of all regulatory approvals (including the
approval of the Queensland Government) and approval of Jupiters' shareholders
and the Court to the schemes of arrangement.
It is intended that merger documentation will be available by end of April 2003
and that the merger will be implemented by the end of July 2003.
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UBS Warburg is acting as financial adviser and Allens Arthur Robinson is acting
as legal adviser to TABCORP.
Salomon Smith Barney is acting as financial adviser and Corrs Chambers Westgarth
is acting as legal adviser to Jupiters.
For further information please contact:
AT TABCORP: AT JUPITERS:
Ms Tricia Wunsch Mr Rob Hines
General Manager Corporate Affairs Chief Executive Officer and
TABCORP Holdings Limited Managing Director
Ph (03) 9868 2595 Jupiters Limited
Ph (07) 5584 8900
AT UBS WARBURG: AT SALOMON SMITH BARNEY:
Mr Peter Scott or Mr Tim Antonie Mr Paul Binsted
UBS Warburg Australia Limited Salomon Smith Barney
Ph (03) 9242 6367 Ph (02) 8225 4663
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