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Morningstar | NASCAR's $45 Offer Should Seal the Deal on International Speedway Going Private

With an increased bid of $45 per share, which values narrow-moat International Speedway at around $2 billion, we believe it is now probable that the go-private deal will close in 2019. The raised bid was unanimously recommended and approved by the special committee of independent directors along with the participating shareholders (the France family), which signed a letter of agreement to cede their shares to NASCAR before the merger. The initial $42 bid on Oct. 9, 2018, represented an 8% premium to International Speedway's prior market close of $39.06. The raised bid of $45 is closer to the company’s 52-week high of $49.95, encouraging remaining investors to agree to a go-private deal. The closure is still contingent on the approval of a majority of the minority shareholders, but we suspect the vote will go through, given the secular headwinds that the business faces on the admissions and broadcasting fronts, which could temper long-term operating margin expansion, limiting the gains that existing shareholders could expect to receive.

We plan to raise our fair value estimate to $45, incorporating a takeover premium, to account for the likelihood of the deal now being completed. We view the shares as fairly valued. Initially, the go-private language suggested that the industry requires "structural changes to best position the sport for long-term success," something that may best be executed without public investor scrutiny. Given that the Smith family has a bid out for close peer Speedway Motorsports, we think the sentiment of key motorsports operators is that long-term decisions to elevate the business could be undertaken more easily out of the public eye.