Analysis: SMI acquires Dover Motorsports

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Speedway Motorsports acquired Dover Motorsports. Miles the Monster statue is seen before a race at Dover (Del.) Int’l Speedway. (Photo by James Gilbert / Getty Images)

CHARLOTTE, NC – Speedway Motorsports, Inc. announced plans to purchase Dover Motorsports, Inc. Monday afternoon.

SMI, based in Charlotte, NC, has eight racing facilities: Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway, Sonoma Raceway, and Texas Motor Speedway.

They also sell racing-related memorabilia, manufacture legendary American cars, and produce and broadcast motorsport programming through the Performance Racing Network.

DVD operates Dover Int’l Speedway and Nashville Superspeedway. In the past, Dover also owned the Gateway Int’l Raceway, the Memphis Int’l Raceway, the Long Beach Grand Prix and the Denver Grand Prix; all have been sold over time.

The majority of the existing shareholders have agreed to tender their shares in favor of the transaction. They also hold a super majority of the votes.

The Rollins family has long held the largest percentage of DVD inventory.

Over the years, hedge funds have written to the board asking them to maximize shareholder value and explore strategic options, including an outright sale or merger.

The transaction is subject to customary closing terms and conditions.

Advisors for the DVD included Raymond James & Associates, Inc. and Faegre Drinker Biddle & Reath LLP. Parker Poe Adams & Bernstein LLP worked with SMI.

The deal has a net worth of $ 131.5 million. SMI offered DVD $ 3.61 per share for all outstanding DVD share shares. This represents a premium of $ 1.33 or a premium of 58% over the previous day’s closing price of $ 2.28 per share.

DVD shares were trading as low as $ 1.07 at the start of the close in April 2020.

SMI went private in October 2019, in a nearly $ 800 million deal. Its shares had previously been listed on the stock exchange since 1998.

ISCA also went private in October 2019 with a $ 2 billion deal.

With the sale of DVDs, there won’t be companies listed on the major stock exchanges that operate racetracks.

In the early 2000s, there were five listed powersports track operators. These were International Speedway Corp., Speedway Motorsports Inc., Dover Motorsports, Penske Motorsports Inc. and the Grand Prix Association of Long Beach.

Mergers between motorsport companies have thinned the herd. TRK and DVD acquired GPALB, ISCA bought TRK and now SMI has merged with DVD. ISCA and SMI have gone private.

Part of the financial life cycle of companies may involve a return of private companies to public procurement. Entities can do this for liquidity purposes or to collect fair price private equity.

Investment bankers will be involved in these decisions on whether to return the green flag to capital markets.

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