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Investors continued to pummel Tabcorp Holdings yesterday as the odds
appeared to swing in favour of the gaming giant winning the battle for Jupiters.
Shares in Tabcorp fell more than 2 per cent for the second successive day,
tumbling 23c to $10.25, after it revealed plans to assume control of the
Queensland casino operator.
Victorian-based Tabcorp owns Sydney's Star City casino.
``Eighty per cent of the time, if a company announces an acquisition
[target], their share price will go down because the benefits in the short term
go to the company being acquired," ABN Amro gaming analyst Sean Monaghan said.
Shares in Jupiters rose a modest 4c to another record high of $6.15, after
the stock gained 13 per cent on Monday.
Jupiters' merger aspirant Unitab rose 10c to close at $4.50. The gaming group
expects to conclude its merger discussions with Jupiters by the end of the week
when the two companies meet to explore possible merger exchange ratios.
Although Tabcorp will eagerly await the outcome of these discussions, a
source close to the deal suggested that the gaming group is in the throes of
outlining its case to the Jupiters board.
``A board of this type would give consideration to all options
contemporaneously," he said.
Many analysts believe Tabcorp to be the frontrunner because of its ability to
pay a reasonable premium. But it faces regulatory hurdles.
One analyst said there was some concern about the impact of the acquisition
on Tabcorp's balance sheet, given that the investment would not bear much fruit
in the short term. ``Tabcorp is a blue chip," he said. ``It doesn't need to
rush out and make an expensive acquisition when a lot of people can't see a
major benefit in the short term."
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