Dover Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc. Announce Merger
September 27 2010 - 4:28PM
Business Wire
Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE)
(“Gaming”) and Dover Motorsports, Inc. (NYSE: DVD) (“Motorsports”)
announced today that they have entered into a definitive agreement
to combine their businesses through a merger under which
Motorsports stockholders will receive .501 shares of common stock
of Gaming for each share of common stock or class A common stock of
Motorsports (the “Combination").
Gaming and Motorsports are uniquely interrelated businesses that
were separated in a tax free spin-off over 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, will continue its existence as an operating
subsidiary of Gaming and will delist its common stock from the New
York Stock Exchange. The common stock of Gaming would continue to
be listed and trade on the New York Stock Exchange.
The Board of Directors of each company has unanimously approved
the Combination and will recommend its approval to the stockholders
of each company. The share exchange ratio was arrived at based on a
financial analysis of both companies on a stand alone basis and as
a combined entity and included consideration of the long and short
term historical trading prices for each company’s common stock,
among other factors. On the basis of such analysis, management of
each company believes that there is no premium being paid by either
company. The average exchange ratio for the fifteen consecutive
trading days ending September 24, 2010, the last trading day
immediately prior to the date of this announcement, was .501.
The Combination is subject to customary conditions precedent to
closing, as well as stock exchange and regulatory approvals. In
addition, the Board of Directors of each company has reserved the
right to terminate the Combination without liability if, in the
judgement of the Board of Directors, 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.
The Combination will be subject to a stockholder vote of each
company. Gaming and Motorsports are both “controlled corporations”
under New York Stock Exchange regulations and they are under common
control as they share common directors and executive officers.
Class A stockholders of each company are expected to vote in favor
of the transaction and would normally have sufficient voting power
to cause the merger to be approved. However, the Board of each
company has included an additional vote requirement by which a
majority of shares not owned by officers, directors or affiliates
of each company must approve the Combination. A joint proxy
statement is being prepared for a vote of Gaming and Motorsports
stockholders and special meetings of Gaming and Motorsports
stockholders are expected to be scheduled promptly after regulatory
approvals and clearances are obtained.
Henry B. Tippie is Chairman of the Board of both Gaming and
Motorsports. Mr. 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
following the closing of the Combination. Denis McGlynn, who is the
Chief Executive of both Gaming and Motorsports will continue as
Chief Executive Officer of Gaming after the Combination.
Mr. Tippie stated, “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. 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. 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. 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.”
Certain Advisors
Raymond James Ltd. has acted as financial advisor to Gaming and
Motorsports in connection with the Combination. Dewey & LeBoeuf
LLP, Montgomery, McCracken, Walker & Rhoads, LLP and Richards,
Layton & Finger, P.A. have acted as legal counsel to Gaming and
Motorsports. Montgomery, McCracken, Walker & Rhoads, LLP will
provide a legal opinion relative to the tax free nature of the
reorganization.
This release contains or may contain forward-looking statements
based on management’s beliefs and assumptions. Such statements are
subject to various risks and uncertainties that could cause results
to vary materially. Please refer to the SEC filings of both Dover
Downs Gaming & Entertainment, Inc. and Dover Motorsports, Inc.
for a discussion of such factors.
Dover Downs Gaming & Entertainment, Inc. is a diversified
gaming and entertainment company whose operations consist of Dover
Downs Casino — a 165,000-square foot casino complex featuring
popular table games, the latest in slot machine offerings,
multi-player electronic table games, the Crown Royal poker room,
and a Race & Sports Book operation; the Dover Downs Hotel and
Conference Center — a 500 room AAA Four Diamond hotel with
conference, banquet, fine dining, spa, retail, ballroom and concert
hall facilities; and Dover Downs Raceway — a harness racing track
with pari-mutuel wagering on live and simulcast horse races.
Dover Motorsports, Inc. is a leading promoter of motorsports
events in the United States. Its motorsports subsidiaries operate
three motorsports tracks in three states and promote NASCAR
sanctioned and other motorsports events. The Company owns and
operates Dover International Speedway in Dover, Delaware; Gateway
International Raceway near St. Louis, Missouri; and Nashville
Superspeedway near Nashville, Tennessee. For further information
log on to www.dovermotorsports.com.
Additional Information
In connection with the proposed transaction, Gaming will file a
registration statement, including a joint proxy statement of Gaming
and Motorsports, with the Securities and Exchange Commission (the
"SEC"). Investors are urged to read the registration statement and
joint proxy statement (including all amendments and supplements to
it) because they will contain important information. Investors may
obtain free copies of the registration statement and joint proxy
statement when they become available, as well as other filings
containing information about Gaming and Motorsports, without
charge, at the SEC's Internet site (www.sec.gov) and at the
company’s websites, under the heading “Investor relations.”
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