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St. Louis Business Journal, September 27, 2010 article


Monday, September 27, 2010, 8:04pm CDT
Dover Motorsports, Dover Downs to merge
St. Louis Business Journal

Dover Motorsports, parent of Gateway International Raceway in Madison, Ill., said Monday that it has agreed to merge with Dover Downs Gaming & Entertainment Inc., eight years after the companies were separated in a spinoff.

Both Dover Motorsports (NYSE: DVD) and Dover Downs (NYE: DDE) are based in Delaware. The merger will be structured as a tax-free reorganization.

The deal calls for Motorsports stockholders to receive 0.501 shares of Gaming common stock for each share of common or class A stock in Motorsports.

Gaming’s shares closed at $3.43 Monday, while Motorsports' closed at $1.75.

The two companies separated in 2002 when what’s now Dover Motorsports spun off its gaming operations as Dover Downs Gaming & Entertainment Inc., which became an independent public company.

The companies said in a release Monday that “for a variety of economic and operational reasons,” the board of each company concluded it would be in the best interests of the companies and their stockholders to merge again.

Motorsports will merge with a new subsidiary of Gaming, and operate as a subsidiary of Gaming. Motorsports will delist from the New York Stock Exchange, and Gaming’s stock will continue to trade on the NYSE.

The companies share common directors and executive officers, who are majority stockholders of both companies. However, the deal requires approval by a majority of shares that aren’t held by officers, directors or affiliates of each company.

The companies said an analysis of trading prices shows neither company is paying a premium, either board can terminate the deal without liability.

Henry Tippie is board chairman of both Gaming and Motorsports. He and the other Gaming board members will continue as directors of the combined company. In addition, Eugene Weaver, a director of Motorsports, will join the combined company’s board, and Denis McGlynn, CEO of both Gaming and Motorsports, will continue as CEO of the combined company.

Tippie said in a statement that the combined company will continue to have the benefits of being publicly held but that by combining, the companies hope to eliminate some of the costs of being a public company. He said the company also hopes that as a larger entity, it will be able to make more advantageous credit arrangements.

“We also expect to be in a better position to manage the considerable real estate holdings that we have in Dover (Del.) once they are owned by a single entity,” he said.

Dover Motorsports Inc. promotes NASCAR-sanctioned and other motorsports events and owns and operates Dover International Speedway in Dover, Del.; Gateway International Raceway in Madison, Ill.; and Nashville Superspeedway near Nashville, Tenn.

Dover Motorsports lost $1.7 million for the three months ended June 30, after writing down the value of its Gateway facility, for which it said it was considering options, including a possible sale.

Dover Downs Gaming & Entertainment Inc.’s operations consist of the Dover Downs Casino complex, the Dover Downs Hotel and Conference Center, and Dover Downs Raceway, a harness racing track. Dover Downs reported net income of $2.28 million for the quarter ended June 30.

© 2010 American City Business Journals, Inc. and its licensors.




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