OCTOBER 13,
2010, 5:37 P.M. ET
Dover Motorsports, Dover Downs
Break Off Merger
DOW
JONES NEWSWIRES
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
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