Market Briefs - May 19-25, 2006

Australian gaming firms Unitab Ltd. (UTB.AX) and Tattersall's Ltd. (TTS.AX) issued a joint statement last week to announce that the Australian Consumer and Competition Commission has considered the proposed merger of equals between the two companies and had no objections. The announcement also stated, "Neither Unitab nor Tattersall's are aware of any outstanding due diligence items or regulatory issues that will hinder the proposed merger of equals from being implemented following approval of the transaction by Unitab shareholders." This week Unitab will issue an explanatory memorandum on the merger, which must be approved by the Australian Securities and Investments Commission and the Supreme Court of Queensland. Unitab shareholders are scheduled to vote on the merger proposal on July 6. Announced in March, the merger plan entail's Tattersall's offering 4.33 of its shares for each Unitab share, valuing Unitab and about A$1.9 billion. Tattersall's has also set aside A$522 million (US$3.98 million) to offer cash to Unitab shareholders who would rather receive A$14 (US$10.68) in cash for every Unitab share.

Ladbrokes' AGM Update: Business is Growing

While investors in Ladbrokes Plc (LAD.L) gathered for the company's annual general meeting last week, the company issued a trading update for the first four months of 2006, revealing that profit before interest and tax had improved by 4 percent compared to the corresponding period a year ago and that total gross win had improved by 11 percent. European retained gross win increased by 7 percent, while total costs increased by 12 percent, in line with expectations. Gross win from e-gaming operations increased by 26 percent while operating costs rose by 32 percent, driven by planned customer recruitment campaigns around major sporting events and in anticipation of the World Cup. Total telephone betting gross win rose by 43 percent while total operating costs grew by one percent.

PBL, Melco again Consider NASDAQ Float

Various press reports from last week indicate that Melco International Development (0200.HK) and Publishing & Broadcasting (PBL.AX) have resumed plans to list their joint venture gambling project in Macau on the U.S. NASDAQ stock market. The companies have reportedly hired UBS, Citigroup and Credit Suisse to prepare for a listing of up to 20 percent of the venture, which could raise around US$1 billion. The two companies originally announced plans in December 2004 to list the venture on NASDAQ. At the time they said they hoped to float by the June 2005, but the listing never proceeded.

Fortuna Will Not Acquire G-Fed

Fortuna Gaming Corp. (FGAM.OB) has announced that negotiations between itself and the G-Fed Group over the potential acquisition of G-Fed have been terminated. Fortuna had issued a letter of intent in December 2005 to acquire 100 percent of G-Fed, but the company now says it is in discussion with G-Fed over a possible joint venture. Fortuna said that a joint venture arrangement would reduce the business and financial risks associated with an acquisition and at the same time allow both parties to maintain control over their operations.

Reporting

For Sportingbet Plc's (SBT.L) third fiscal quarter--the three month period ended April 30, 2006--the company reports £507.3 million (US$956 million) in turnover, an improvement over £386.9 million ($729 million) during the corresponding period last year. Quarterly turnover from sports betting reached £454 million ($855 million), while casino and gaming turnover reached £17.5 million ($33 million), poker turnover reached £32.7 million ($61.6 million) and fee income turnover reached £3.1 million ($5.1 million). Overall gross profit for the quarter improved 58 percent to £84.4 million ($159 million), and profit after tax reached £20.7 million ($39 million). Compared to the same quarter a year ago, the number of new registered Sportingbet customers rose 86 percent to 500,000 during Sportingbet's third quarter while the number of new real money customers rose 58 percent to 170,580. Sportingbet also revealed that CEO Nigel Payne has resigned from his position but will remain onboard as an executive director responsible for regulation and business development. The company's group finance director, Andrew McIver, will be appointed CEO effective Oct. 17, 2006.