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Wall Street Journal, October 13, 2010 article

 

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OCTOBER 13, 2010, 5:37 P.M. ET

Dover Motorsports, Dover Downs Break Off Merger


Dover Motorsports Inc. (DVD) and Dover Downs Gaming & Entertainment Inc. (DDE) broke off their merger pact Wednesday, folding to shareholder opposition to the deal.

Dover Downs had agreed to acquire Dover Motorsports in an all-stock deal that valued the target at roughly $62.9 million. The deal had represented a 2.4% discount to Dover Motorsports' closing stock price Sept. 27, the day the deal was announced.

But some shareholders have vehemently opposed the combination. Last week, Dover Motorsports's largest outside shareholder, Marathon Partners LP, called it a "value-destroying transaction" meant to prolong Chairman Henry Tippie's "dominion." The process to reach the deal was flawed and "tainted by conflicts of interest," the firm added.

On Wednesday, Tippie -- chairman of both Dover Downs and Dover Motorsports -- said stockholders on both sides expressed their opposition to the deal. The companies needed approval by a majority of unaffiliated stockholders, and so the firms mutually decided to call off the merger, even though Tippie said they believe the combination would have benefited both sides.

Neither of the companies' stocks were active after hours. Dover Motorsports closed Wednesday up 2.1% at $1.96, while Dover Downs ended down 0.9% at $3.45. Both are negative so far this year, while the broader market has risen.

 

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com

Copyright 2010 Dow Jones & Company, Inc. All Rights Reserved

 

 

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