For the last few decades, International Speedway Corporation (NASDAQ:ISCA) and Speedway Motorsports (NYSE:TRK) have been growing by acquiring privately owned racetracks to expand their NASCAR empires. Today, they are the only two companies that really matter in the NASCAR industry, and they control more than 85 percent of Sprint Cup races, which are the main NASCAR racing events. Out of a total of 38 Sprint Cup dates, International Speedway Corporation has 21 and Speedway Motorsports has 12. There are only five Sprint Cup races that are not in the hands of these two players. Two belong to Pocono Raceway, one belongs to Indianapolis Motor Speedway, and the remaining two belong to Dover Motorsports (NYSE:DVD).
International Speedway Corporation and Speedway Motorsports have had previous conversations with the management of Dover Motorsports to buy the entire company because of these two Sprint Cup dates. The obstacle was always the price because in their opinion, Dover Motorsports wanted too much for it. Now, they have an unbelievable opportunity to finally acquire Dover Motorsports at a jaw-droppingly low price. Yesterday, Dover announced that Dover Downs Gaming & Entertainment (NYSE:DDE) will acquire it via a merger. Because there is no premium being offered over the trading price, investors are hiring law firms to investigate the possible breach of fiduciary duty by the Board of Dover Motorsports. They believe that Dover Motorsports did not shop around the offer to get the highest price for its shareholders. Can you blame them? In my opinion, Dover Motorsports should sell for $5 per share, not below $2 per share, the price that Dover Down is trying to pay. If you wish to read my analysis of the company, click here.
This presents a perfect opportunity for International Speedway or Speedway Motorsports to acquire Dover Motorsports at a favorable price because all they would have to do is to raise the bid to a reasonable level, and this would give law firms and investors enough ammunition to kill the current merger deal.
My message to International Speedway Corporation and Speedway Motorsports is this: You said you wanted Dover. You’ve been negotiating back and forth for quite some time. Now is your chance. By announcing the merger without shopping around for a premium price, Dover is exposing itself to higher bids, and saying “We are ready to sell, bring me some offers.” International Speedway Corporation and Speedway Motorsports, this is your chance, put your money where your mouth is.