Tabcorp Holdings Limited · ASX:TAH
Tabcorp — Merger or Acquisition (November 2003)
19 slides from Tabcorp's merger presentation, Nov 5, 2003
Slide 1: Proposed merger with Tab Limited
TABCORP Holdings Limited Proposed merger with Tab Limited Investor presentation 5 NOVEMBER 2003 Mes, TABCORP
Slide 2: Agenda
Agenda @ TABCORP proposes merger with Tab @ Substantial premium & value uplift for Tab’s shareholders @ Profile of the merged group @ Expected benefits from the merger @ Centre core competencies in major markets @ Benefits to key stakeholders @ Proposed funding structure @ Merger implementation and
Slide 3: TABCORP proposes merger with Tab
TABCORP proposes merger with Tab TABCORP’s proposal implies a value for Tab of $4.26 per share’ # TABCORP has today provided a merger proposal to Tab # TABCORP is proposing that Tab shareholders receive — 23 TABCORP shares — $162 cash for every 100 Tab shares they own @ Tab options would be acquired
Slide 4: Substantial premium for Tab shareholders
Substantial premium for Tab shareholders TABCORP’s merger proposal represents a substantial premium to Tab’s tracing price and the proposed merger with UNITAB Value Premium * $ $ % Tab’s share price prior to announcement of 3.34 0.92 27.6 proposed UNITAB merger Current value to Tab shareholders of t
Slide 5: Substantial premium for Tab shareholders (continued)
Substantial premium for Tab shareholders (continued) The implied value of TABCORP’s merger proposal implies an attractive acquisition multiple Acquisition multiples—precedent transactions ' 14.0x 12.0x 10.0x a a 8.0x 3 & < 6.0x a Ly a 4.0; 4.0x a 2.0x 0.0x UNITAB by — Tab by Star City Jupiters Crown
Slide 6: Value uplift for Tab shareholders
Value uplift for Tab shareholders The merger proposal would be expected to be significantly accretive for Tab shareholders on an EPS (pre goodwill amortisation) basis and to result in a dividend per share uplift EPS (pre g/w amortisation) (2003PF) DPS (2003PF) 30.0 28.9 +50% 30.0 24.9 +66% ~ 25.0 oe
Slide 7: Profile of the merged group
Profile of the merged group The merged group would be the pre-eminent gambling and entertainment company across the wagering, casino, gaming and keno markets in Australia @ Operations spread across the east coast of Australia @ Ownership of wagering operations in NSW & Victoria @ 18,000 gaming machi
Slide 8: Profile of the merged group (continued)
Profile of the merged group (continued) The combined TABCORP / Tab would generate EBITDA in excess of $900 million (before synergies) (based on 2003PF) Financial summary TABCORP / Tab EBITDA of TABCORP/Tab (2003PF) by business (2003PF) $m Net revenue 3,547 Wagering EBITDA 926 Casinos 39% EBITA 748 E
Slide 9: Merger of Australia's two premier wagering businesses
Merger of Australia’s two premier wagering businesses Significant value would be expected to be created through a merger of TABCORP’s and Tab’s wagering businesses ¢ 4 Combine and leverage expertise in wagering operations Greater operational scale to extract synergies and invest in the business Extr
Slide 10: Expected benefits from the merger
Expected benefits from the merger TABCORP’s proposed merger terms are attractive to both Tab and TABCORP shareholders ® Substantial synergy and efficiency benefits are expected from combining operations, skills and processes — merger of wagering head offices — expected computer system integration ac
Slide 11: Relative wagering business performance
Relative wagering business performance TABCORP is confident that it can improve the performance of Tab’s wagering business Relative EBIT growth (1999 to 2003) (rebased to 100) 150 140 130 120 110 100 90 Tab wagering CAGR (1999-2003) = 6.6% | TABCORP wagering CAGR (1999-2003) = 9.8% _- 1999 2000 2001
Slide 12: Centre core competencies in major markets
Centre core competencies in major markets TABCORP will continue to centre core competencies in major markets ® Considerable operational benefits are expected from centering core skills in major markets @ TABCORP’s casino operations are being headquartered in Queensland following the merger with Jupi
Slide 13: Centre core competencies in major markets (continued)
Centre core competencies in major markets (continued) TABCORP’s geographic and business mix well balanced Business diversified over 3 states and 3 businesses EBITDA—State EBITDA—Business QLD Wagering 17% ow Casinos 320% 39% Nsw 149% vic" 34% Gaming 31% @ NSW & Victoria TABs @ 13,750 gaming machines
Slide 14: Benefits to New South Wales
Benefits to New South Wales A merger of TABCORP and Tab would provide the following benefits to NSW © © NSW to become the headquarters of Australia’s largest wagering group Combined TABCORP / Tab pool would be expected to enhance customer satisfaction — potential to attract overseas wagering revenue
Slide 15: Benefits to key stakeholders
Benefits to key stakeholders A merger of Tab and TABCORP is expected to provide benefits to all key stakeholders ¢@ TABCORP shareholders — expected to be EPS (pre amortisation) positive in the second full year of the merger — share in the significant synergies which are expected — further jurisdicti
Slide 16: Proposed funding structure
Proposed funding structure TABCORP would conservatively fund the merger and would expect to retain an investment grade credit rating Uses Sources Number of Tab shares (m) 451.2 Implied value per share’ $4.26 Acquisition equity value ($m) 1,922 Equity ($m) 1,192 52% Cost of acquiring options ($m) 3 D
Slide 17: Merger implementation and conditions
Merger implementation and conditions The most appropriate method of implementing a merger would be decided after discussion with key stakeholders @ The merger proposal will require the approval of the NSW Government, and would not proceed unless the necessary government approvals are received @ The
Slide 18: Conclusions
Conclusions TABCORP’s proposal represents an excellent opportunity for Tab’s shareholders TABCORP’s UNITAB’s merger proposal merger proposal Substantial premium vv x Cash component vv x Expected synergies vv v Shareholding in a diversified vv v gambling business Expected substantial earnings vv x an
Slide 19: TABCORP Holdings Limited
TABCORP Holdings Limited Proposed merger with Tab Limited Investor presentation 5 NOVEMBER 2003 Mes, TABCORP
Tabcorp Holdings — Merger or Acquisition (November 2003) on 6ix