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Bets Split Over Australian Gaming Merger

15 December 2003

AUSTRALIA – As reported by the Sydney Morning Herald: "The TAB board is caught in the awkward position of appearing to support an offer it knows it cannot support much longer while trying to talk down the appeal of a proposal that it knows is appealing.

"Yesterday's `non-statement' from the board, a relatively neutral and uninformative progress report on the UNiTAB merger and the competing Tabcorp proposal, reflects the board's dilemma.

"…TAB shareholders would hang their directors if the board pursued the merger and paid a premium to UNiTAB shareholders rather than solicit a premium from Tabcorp for their own shareholders. If they formally abandon the UNiTAB deal, however, the TAB board not only has to pay UNiTAB $5 million for breaking the merger agreement but it would then have no formal offer on the table.

"Tabcorp has made a proposal rather than an offer, a tactic which is designed to invite TAB's shareholders to force TAB to the negotiating table on Tabcorp's terms.

"…As it stands, if UNiTAB disappears before Tabcorp makes an offer, the foreshadowed Tabcorp bid of 23 Tabcorp shares and $162 cash for every 100 TAB shares - worth just under $4.20 a share at Tabcorp's share price - would be as good as it gets.

"…It remains open to the TAB board to have a bit of a bet each way. They could say that if Tabcorp were prepared to formalise the proposal, they would pay UNiTAB its break fee of $5 million and open their books to Tabcorp without committing themselves to endorsing the offer…"

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