ISC, Penske Motorsports propose merger DETROIT (May 10, 1999) Officials from both ISC and Penske Motorsports stand for a photo in 1997 in California. International Speedway Corporation and Penske Motorsports, Inc. Monday announced they have...
ISC, Penske Motorsports propose merger
DETROIT (May 10, 1999) Officials from both ISC and Penske Motorsports stand for a photo in 1997 in California. International Speedway Corporation and Penske Motorsports, Inc. Monday announced they have signed a definitive merger agreement to create America's largest provider of motorsports entertainment -- which in 1999 will stage 32 events in NASCAR's three leading series. Upon completion of the transaction, ISC will operate 10 motorsports facilities across the United States with more than 800,000 seats and 400 corporate hospitality suites. In 1999, the two companies will promote more than 100 motorsports events.
"This merger will create the premier company in the country's fastest-growing spectator sport and will provide benefits to America's racing fans, and ISC and Penske Motorsports shareholders," said William C. France, chairman and chief executive officer of ISC. "Penske Motorsports brings excellent facilities, exposure to key markets, a strong management team and substantial growth potential to the combined company."
"I believe this transaction represents an excellent opportunity for our company, its shareholders and all motorsports fans," said Roger Penske, who will serve as vice chairman of ISC. "Penske Motorsports and ISC have a great deal in common. Importantly, we share ISC's vision for growing our operations while continuing to enhance the motorsports experience for racing fans."
The combined entity will retain the International Speedway Corporation name. The transaction is expected to close early in ISC's fiscal 1999 fourth quarter.
The deal means that ISC will own or operate the following facilities, all of which conduct some form of NASCAR racing events: California Speedway in Fontana; Darlington Raceway in South Carolina; Daytona International Speedway in Daytona Beach, Fla.; Homestead-Miami Speedway in South Florida; Michigan Speedway in Brooklyn; Nazareth Speedway in Pennsylvania; North Carolina Speedway in Rockingham; Phoenix International Raceway; Talladega Superspeedway in Alabama; and Watkins Glen International in New York.
In addition, ISC operates Tucson Raceway Park, a NASCAR Winston Racing Series facility in Arizona; DAYTONA USA, the "Ultimate Motorsports Attraction" and the "Official Attraction of NASCAR;" and MRN Radio.
With the merger, ISC is involved in the preliminary stages of announced facility development in the areas surrounding Chicago, Denver, Kansas City, Kan., and New York City.
In fiscal 1998, ISC and Penske Motorsports generated revenues in excess of $300 million and generated operating margins of 32 percent and 27 percent, respectively. Under terms of the agreement, ISC will acquire the 88 percent, or 12.2 million outstanding common shares, of Penske Motorsports stock that it does not already own for $50 per share, subject to a collar provision.
Penske Motorsports stockholders will be able to elect to receive this consideration as either $15 in cash and $35 in Class A Common Stock of ISC or $50.00 of Class A Common Stock of ISC.
Calculated as of this date, the total transaction value of the Penske Motorsports equity (including the 12 percent of Penske Motorsports currently owned by ISC and adjusted for outstanding options) is approximately $705 million with a net value of approximately $623 million. In addition, Penske Motorsports currently has approximately $50 million of debt outstanding.
"We are delighted that this transaction will extend our close relationship with Penske Motorsports, which began three years ago when we acquired an equity interest in the company," said France, who will remain chairman and CEO. "During this time, we have gained a deep knowledge of the attractive markets they serve, insight into their management infrastructure and practices and a better understanding of the business of open-wheel racing. This merger will take our relationship to the next level.
"In recent years, motorsports entertainment has experienced a tremendous increase in popularity as evidenced by dramatic gains in race attendance and television viewership. As separate companies, both ISC and Penske Motorsports have participated in this growth and helped lead the expansion of motorsports beyond its traditional southeastern stronghold.
"As such, we are in an excellent position to participate in the expected growth in television revenues and electronic media. Additionally, our capital resources and operating expertise will enable us to continue to expand our motorsports facilities to meet heightened demand. And our expanded geographic reach and larger base of operations will allow us to pursue new national sponsorships and develop cross-marketing opportunities with a wider array of partners.
"This combination will bring together two management teams with demonstrated strength at both the corporate and track levels. Roger Penske, Penske Motorsports' founder and chairman, will serve as vice chairman of ISC's Board of Directors, and Penske Corp. will be our second-largest holder.
"Greg Penske, Penske Motorsports' president and chief executive officer, will continue to play a pivotal role in track operations overseeing the Penske Motorsports facilities. At the track level, facility managers will share operating expertise to enhance track operations and the growth of each facility."
"I look forward to joining the ISC senior management team to realize the full potential of our combined company," Greg Penske said. "I see a great opportunity to contribute to this world-class operation and integrate our successful operating strategies and fan amenities at ISC's facilities. At the same time, we will realize the benefits of joining with an industry leader."
Following the completion of the transaction, ISC will expand its board of directors to include Roger Penske, Greg Penske and Walt Czarnecki, who currently serves as vice chairman of Penske Motorsports.
"Through this acquisition, we will benefit from a broader revenue base," France said. "The resulting addition of new management personnel will enhance our ongoing expansion efforts in Kansas City, Chicago, New York and Denver. We will now have a greater opportunity to do what we do best: Provide top-notch motorsports entertainment for America."
Source: NASCAR Online