DOVER, DELAWARE - MAY 15: Miles the Monster statue is seen during the NASCAR Xfinity Series Drydene 200 race at Dover International Speedway on May 15, 2021 in Dover, Delaware. (Photo by James Gilbert/Getty Images)
(James Gilbert/Getty Images)
NASCAR Cup Series

Analysis: SMI Acquires Dover Motorsports

November 9, 2021

CHARLOTTE, N.C. — Speedway Motorsports, Inc. announced plans to buy Dover Motorsports, Inc. on Monday afternoon.  

SMI, based in Charlotte, N.C., owns 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 souvenirs, manufacture U.S. Legend Cars, and produces and broadcasts motorsports programming via Performance Racing Network.

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

A majority of existing shareholders have agreed to tender their shares in favor of the deal. They also hold a super majority of voting power. 

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

Through 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 deal is subject to the customary closing terms and conditions.

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

The deal has an equity value of $131.5 million. SMI offered DVD $3.61 per share for all outstanding shares of DVD stock. This represents a $1.33 premium or 58 percent premium over the prior day’s closing price of $2.28 per share. 

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

SMI went private in October 2019, in almost an $800 million transactions. Its shares had previously been publicly traded since 1998.

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

With DVD being sold, there will be no publicly traded companies on the major exchanges that operate race tracks.

During the early 2000s, there were five publicly traded motorsports track operators. They were International Speedway Corp., Speedway Motorsports Inc., Dover Motorsports, Penske Motorsports Inc. and the Grand Prix Association of Long Beach.

Mergers among motorsports companies has thinned the herd. TRK and DVD acquired GPALB, ISCA bought TRK and now SMI has merged with DVD. ISCA and SMI went private.

Part of the corporate financial life cycle may involve private companies going back to the public markets.  Entities may do this for liquidity purposes or private equity cashing out at the right price. 

Investment bankers will be part of these decisions on whether to take the green flag back to the capital markets.