Churchill Downs Inc., owner of the racetrack where the Kentucky Derby is held, said Wednesday it will buy the Youbet horse betting Web site for about $126.8 million.
Youbet shareholders would get 0.0598 shares of Churchill Downs stock plus 97 cents per share cash for each share of Youbet stock owned. If the deal closes, Youbet shareholders will own a 16 percent stake in Churchill Downs.
Youbet lets people bet on horse races online. It has WagerPadPro, MyROI and a beta version of WhoDoYouLike.com, which lets horse racing fans interact during races. Youbet also provides content to CBSSports.com and ESPN.com.
Churchill Downs, based in Louisville, Ky., said in a statement that less than 14 percent of all bets on U.S. thoroughbred racing are placed online but that it expects that percentage to grow.
Both company boards have approved the deal but it still needs to be approved by Youbet shareholders and regulators. Holders of about 24 percent of Youbet's shares have indicated they would approve the deal, which is expected to close in the second quarter of 2010.
Churchill Downs shares rose 10 cents to $31.67 in after-hours trading Wednesday after closing at $31.57, up 38 cents from a day earlier.