Magna Finishes $53 million Ladbroke Deal

Magna Entertainment has completed a $53 million deal to purchase an account wagering system in Pennsylvania, The Meadows harness track, four off-track betting outlets, and an 18% stake in The Racing Network.

The Toronto-based racing conglomerate bought everything from Ladbroke Racing Corp. with cash, stock, and a promissory note. Half the purchase price was paid in cash. A quarter of the price was paid by issuing 3,178,297 shares of Class A stock and a promissory note to be paid in two installments covered the rest. The cash portion of the transaction could be adjusted at closing and result in a return of $8 million to Magna.

Magna now has the tools it needs to create its own interactive horse racing service.

"The acquisition of the Call-A-Bet account wagering system, together with Ladbroke's other Pennsylvania horse racing operations, is an important step in MEC's strategic plan of building the premier account wagering business in the country," said Frank Stronach, chairman of Magna. "By acquiring the existing Call-A-Bet system, which already has a profitable operating history, MEC will significantly advance its electronic media strategy and realize an immediate improvement in its earnings per share."

For the year ending Dec. 31, 2000, Ladbroke Racing Pennsylvania reported $29 million in revenue from Call-A-Bet, $11 million in revenue from The Meadows, and $31 million from the OTBs, which are in the greater Pittsburgh area. Ladbroke reported earnings before taxes, interest, depreciation, and amortization of $12 million for 2000.

The Racing Network provides live Thoroughbred and harness racing through the DISH network. The company provides the video for Canadian account wagering systems. TRN Canada can carry racing from the United States' major racetracks because exclusivity agreements with the TV Games Network don't apply in Canada.

Magna owns a network of seven racetracks including Santa Anita Park and Gulfstream Park. The company will be leasing Portland Meadows in Oregon for two or three years and has expressed interest in leasing Suffolk Downs in East Boston. Magna is also developing horse racing products for interactive cable, broadcast and satellite television, and the Internet.