Forum Report: Dover Motorsports, Inc. |
Survey of Shareholder Objectives
The Forum was asked by Dover Motorsports investors to conduct an
independent survey of their fellow shareholders to determine their value
realization objectives, in terms of pricing as well as alternative
strategies for management's stated plan to sell the company. The requested
survey was initiated on November 2, 2009 with invitations to beneficial
owners of the company’s Common Stock.
What was presented to shareholders is available from these links:
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Introduction
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Questionnaire
Summarizing the results, 47% of responding shareholders thought pricing at
$2.50 per share or less was reasonable for an all-cash offer to buy the
company, and at $3.00 per share more than 59% considered the price
reasonable. Price objectives varied significantly according to the
shareholder’s strategy preference, as would be expected: only 33% of those
supporting a suspension of sale efforts until the economy improves
considered $2.50 a reasonable price, contrasted with 65% acceptance of
that price objective among those who selected the alternative of
continuing existing management efforts. A $3.00 price objective, though, was
considered reasonable by well over half of each preference group, as shown
in the following chart.
Comments of participants presented a range of views explaining their
pricing and strategy choices, as indicated by these examples:
“Remain Independant. Do not sell out to another track.” – an investor
who supported continuing existing management efforts and indicated no
price objective, reporting ownership of up to 1,000 shares
“Need more critical mass - does not seem achievable in forseeable future.
My answers have not focused on TRK v. ISCA - go w/the one making best
offer.” – an investor supporting selling the company now at $1.75 per
share, reporting ownership of up to 1,000 shares
“Management has done a terrible job with this company. …Even though its
position is weak, I would still strongly urge the company to cut whatever
deal it can with either ISCA or TRK and be done with it. DVD's position is
only getting weaker, not stronger. Waiting another year or two or three is
more likely to result in a lower price, not a higher one. …[T]he idea of a
stock deal with either ISCA or TRK is more appealing than a cash deal. A
stock deal will allow shareholders to participate in potential upside over
time but with a much lower risk profile as compared with operating as a
stand-alone company. ...Henry Tippie...has a fiduciary duty to all
shareholders and should take action immediately to salvage some of our
value.” – an investor supporting selling the company now at $3.00 cash
per share or $2.50 in exchange for shares of either International Speedway
or Speedway International, reporting ownership of between 100,000 and
500,000 shares
“Downside risk of going at it alone should be weighed heavily by directors
of Dover.” – an investor who wrote in the alternative strategy to “Sell
out for shares of ISCA or TRK” at values of $4.00 or more per Dover share,
reporting ownership of over 500,000 shares
These comments also suggest possible non-investment preferences relating
to potential
bidders. Several responses suggested perceptions of other track operators
as rivals rather than as prospective strategic partners, including one
commenting “Don't give the company to the greedy [expletive].” Although
these attitudes might have caused some respondents to set higher
pricing objectives for exchanges of stock with the perceived rivals, other
respondents expressed more typical investor views relating to tax
advantages or opportunities to participate in growth of a combined
business. As indicated in the accompanying chart showing the levels of
value acceptance for the various stock and cash alternatives, the
resulting average of respondents’ pricing objectives showed little
difference between cash and any of the prospective merger partners’ stock.
The Shareholder Forum will be inviting the company’s management to comment
on the survey results, and anything they present for your consideration
will of course be posted on the Forum web site.
Your questions will be welcomed, and additional details or analyses of the
survey can be made available upon request.
GL – November 9, 2009
Gary Lutin, Forum chairman
c/o Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Email:
gl@shareholderforum.com
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