Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc. announced Sept. 27 they have entered into a definitive agreement to combine their businesses through a merger. Motorsports will become a subsidiary of Dover Downs Gaming & Entertainment.
Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc. announced Sept. 27 they have entered into a definitive agreement to combine their businesses through a merger.
Gaming and motorsports are uniquely interrelated businesses that were separated in a tax-free spin-off more than eight years ago. For a variety of economic and operational reasons, each company’s Board of Directors has concluded that it would be in the best interests of the companies and their stockholders for the companies to be brought back together again.
The merger will be structured as a tax-free reorganization. Motorsports will be merged with a new subsidiary of gaming, continue its existence as an operating subsidiary of gaming and delist its common stock from the New York Stock Exchange.
Motorsports stockholders will receive 0.501 shares of common stock of gaming for each share of common stock or class A common stock of motorsports
The Board of Directors of each company has unanimously approved the combination and will recommend its approval to the stockholders of each company.
In addition, the Board of Directors of each company has reserved the right to terminate the combination without liability if it determines that to do so would be in the best interests of the company and its stockholders. There are no termination or break up fees.
Henry B. Tippie is chairman of the board of both gaming and motorsports. Tippie and the other members of the Board of Directors of Gaming will continue as directors of gaming after the combination. In addition, Eugene W. Weaver, a director of motorsports, will join the Board of Directors of Gaming immediately. Denis McGlynn, who is the chief executive of both gaming and motorsports, will continue as chief executive officer after the merger.
“The timing is right for us to combine gaming and motorsports. Gaming’s operations are presently all in Dover, Delaware, and while motorsports has facilities in Delaware, Illinois and Tennessee, its nerve center and most significant operations and real estate holdings continue to be in Dover,” stated Tippie. “There are many benefits to being a public company and the combined company will continue to have the advantage of those benefits.
“There are also considerable costs to being a public company and we hope to be able to eliminate some of those costs by going from two public companies to one,” he stated. “We also expect that as a larger entity we would be able to arrange for a more advantageous credit facility.”
“And, with a larger share base, we also hope that the stock of gaming will prove to be more liquid. It is our present intention to maintain the current quarterly dividend of three cents per share that we have been paying on gaming common stock, although we anticipate that the dividend on our class A common stock will be reduced. Of course, payment of any future dividends is at the discretion of our Board of Directors,” Tippie stated.
“We also expect to be in a better position to manage the considerable real estate holdings that we have in Dover once they are owned by a single entity,” he stated.