By Jerry Jordan, Editor
CONCORD, N.C. – A day after the board of directors voted to provide a 15-cent per share dividend to stockholders, it was publicly announced that Sonic Financial Corporation had made an $18 per share non-binding offer to buy all outstanding shares of Speedway Motorsports Inc. not owned by the Smith family and take the company private.
“Sonic Financial Corporation (“SFC”) is pleased to submit this non-binding proposal to acquire all of the outstanding shares of stock of Speedway Motorsports, Inc. (the “Company” or “TRK”) that are not owned by SFC, O. Bruton Smith, his family and entities controlled by Mr. Smith and his family (collectively with SFC, the “Smith Group”), for cash consideration of $18.00 per share (our “Proposal”),” states the proposal from Sonic filed with the SEC. “As you know, the Smith Group beneficially owns, directly or indirectly, approximately 29 million shares of TRK, and controls over 70% of the voting power of TRK.
“We believe that our Proposal reflects an extremely attractive value to the Company’s public stockholders. Specifically, $18.00 per share represents a significant premium of 31% to yesterday’s closing price and 26% to the 30-day volume-weighted average price per share of $14.27 as of April 22, 2019.”
The move comes several months after NASCAR, which is privately-controlled by the France Family, made a bid to purchase all shares of International Speedway Corporation for $42 per share and then last week – following a lawsuit by shareholders – upped their bid to $47 per share.
Asked by Kickin’ the Tires during the annual shareholders meeting what affect the offer by NASCAR to purchase ISC had on SMI, President and CEO Marcus Smith responded that he believed it showed NASCAR’s belief in the health of the sport.
Similarly, to the privately-held NASCAR bid to take ISC private, SFC is a privately-controlled company of O. Bruton Smith, his family members and associates. The company offers financial assistance and corporate transportation to publicly-traded Sonic Automotive Group and SMI. And like the NASCAR bid, an independent committee has been established to review the SFC proposal. That committee consists of Mr. Mark M. Gambill, Mr. James P. Holden and Mr. Tom E. Smith.
Holden was not present during the annual shareholders meeting, nor was O. Bruton Smith, who was on the ballot to continue serving as a member of the board of directors for a term of three years. It was stated that Smith was delayed by traffic and he was seen heading up the elevator for the ensuing board of directors meeting where the SFC proposal was made.
“SFC and members of the Smith Group are best-positioned to continue to manage and oversee the Company as a private company,” the filing stated. “Mr. Bruton Smith, Executive Chairman and founder of the Company, has been a pioneer in the motorsports business since the sport’s beginning. His ingenuity and vision for the sport have been highly instrumental in the motorsports business for decades, and the sport has recognized his contributions by inducting him into the NASCAR Hall of Fame. Additionally, Mr. Marcus Smith, the current Chief Executive Officer of the Company, has played a key role in the motorsports industry and has also been an important figure in the evolution of the sport and the Company over the past several years. Given the Smith Group’s role in the sport and involvement in the Company, we believe we are the best party to lead the Company through the challenges ahead.
“We believe that our Proposal reflects an extremely attractive value to the Company’s public stockholders. Specifically, $18.00 per share represents a significant premium of 31% to yesterday’s closing price and 26% to the 30-day volume-weighted average price per share of $14.27 as of April 22, 2019. As you know, NASCAR racing has faced several challenges in recent years, and the Company has been impacted by these challenges. NASCAR has indicated the sport would benefit from structural change. We believe TRK would be more able to compete in this challenging and changing environment as a private company.”
There is speculation that bringing ISC and SMI private would make it easier for the sport to adjust schedules and track alignments. It would also bring the sport out of the spotlight of public scrutiny by shareholders and allow each side to make decisions based on what was best for stock car racing instead of what is in the best interest of shareholders. However, it also sets up the possibility that one or both privately-held companies could be purchased by a larger investment group or one of the two racing families – the Smith or the Frances – could purchase the other’s company and gain full control of the top tiers of stock car auto racing.
The next public meeting of SMI will take place on May 1 at 10 a.m. EST when officials hold a Q1 earnings call to discuss corporate performance through March 31.