Raceway owner and operator International Speedway (ISCA
42.84, +3.78) trades about 9.7% higher today in reaction to news out Friday
afternoon whereby the National Association for Stock Car Auto Racing (NASCAR)
had offered to acquire all the outstanding shares of ISCA’s Class A and B
common stock, other than those shares held by ISCA’s controlling shareholders,
for $42.00 per share.
The deal comes about six months after news reports suggested that the France family, which owns NASCAR, had engaged with Goldman Sachs to explore possibly selling the stock car racing company. While the France family never substantiated these rumors, it appears that NASCAR was at the very least on the prowl for a potential crutch to counter what has befallen the stock car racing giant these past few years -- namely, falling TV ratings, declining ticket sales, and reduced sponsorships.
That’s where the ISCA deal comes into play. International Speedway, owner and operator of such highly touted tracks as the Daytona International Speedway in Florida -- home to the DAYTONA 500, which has sold out for the last three consecutive years, drawing strong digital consumption by fans -- the Talladega Superspeedway in Alabama -- home of NASCAR playoff event the 1000Bulbs.com 500 -- and the Michigan International Speedway outside of Detroit -- home of the Consumers Energy 400. NASCAR may be drawn to acquiring ISCA by the opportunity it presents to bring on more tracks, which could incrementally add to revenues.
The France Family Group controls about 74.2% of the combined voting power of ISCA’s outstanding stock as of August 31, 2018. Friday’s deal intends to combine ISCA and NASCAR as one privately-held group of companies with the France family as primary owners.
Furthermore, the France family offered that NASCAR’s proposal letter indicates that the outcome of this prospective offer will impact neither the France family’s long-term commitment to the sport nor its interest in maintaining its current ownership in ISCA, as the France family is not interested in selling its shares of ISCA at this time.
Following news of the deal, the ISCA Board has formed a special committee comprised of independent directors J. Hyatt Brown, Larry Aiello, Jr., Larree Renda, and William Graves to act on behalf of the company to consider this proposal. In the interim, NASCAR and ISCA will continue to operate as separate and independent entities.
Jim France, Chairman of ISCA and CEO of NASCAR, suggested that the industry requires structural changes to best position the sport for long term success and that the offer represents a positive step forward in that direction.
After beating market expectations in its third quarter report (October 4), the stock slipped into negative territory on the year as investors scrutinized the company's "narrowed" full year 2018 profit outlook. At that time, ISCA lowered the top end of its FY18 EPS guidance and trimmed its revenue and EBITDA outlook to boot. The cut was made primarily due to lower admissions as management highlighted that attendance for comparable NASCAR events was down about 14% on average and the average ticket price decreased to $83.88, or around 2.5%. Contributing to the attendance declines last quarter were an inclement weather forecast and subsequent rain delay at Michigan and extreme heat impacting the area at Chicagoland. These weather-related impacts were compounded by current headwinds in ticket sales facing the sport.
Recent trade has ISCA hovering near the 200-day simple moving average (42.71) after the stock boasted gains around 16.7% at today's highs.
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