opinion on sell or hold over takeover action, page-2

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CENTREBET holders may have voted in favour of being taken over by Sportingbet for $185 million this week, but they still face a weighty decision ahead of Tuesday's cut-off.

Centrebet (CIL) $2.23

The dilemma is whether to sell on market at substantially above the offer price or sit tight, fill in the paperwork and accept the $2 on offer. By doing the former, holders cede their right to a $90m GST refund claim that Centrebet is confident of winning.

Centrebet shares hit $2.30 on Thursday after the taxman decided not to appeal a similar case involving rival Sportsbet (no relation to Sportingbet), decided in the company's favour on July 26.

Given there are only 87.7 million Centrebet shares on issue, at face value the refund is worth $1.02 a share.

Under the takeover terms, holders would enjoy a $10m one-off payment and then 90 per cent of the remaining $80m.

The catch is that the $80m would be applied as a credit on Centrebet's GST commitments and dribbled out over a period.

How long? The likely scenario is eight to 10 years, but much depends on technical factors such as whether Sportingbet's (as well as Centrebet's) operations can employ the rebate. Pocketing the 23c bird in the hand looks fair enough. But we suspect the patient approach will reap higher rewards.