Daytona Beach, Fla.,-based International Speedway Corp. and Concord, N.C.,-based Speedway Motorsports have partnered to become Motorsports Authentics, which has agreed to buy Action Performance for $13 per common share or about $245 million in cash.
Two top motor sports promoters, including the owner of Phoenix International Raceway, are buying Tempe-based Action Performance Cos. in a deal that is expected to benefit the struggling company.
Action Performance, a marketer and distributor of licensed motor sports merchandise, would be a wholly owned subsidiary of Motorsports Authentics. The acquisition is expected to close by the end of the year.
"This transaction represents the best strategic option for our business," said Fred Wagenhals, president and CEO of Action Performance. "Under the leadership and guidance of Motorsports Authentics’ management committee and a strong integration team, the business should be able to more rapidly execute its turnaround strategy, return to profitability and capitalize on future growth opportunities."
Action Performance has continued its financial slide this year after net income plummeted to $500,000 in 2004, compared with $24.2 million in fiscal 2003.
For the first half of this year, the company reported a nearly $18 million loss.
"I look forward to focusing my efforts on further strengthening the relationships with our licensors and distributors, and contributing to the future success of Motorsports Authentics," Wagenhals said.
Along with Wagenhals, David Riddiford, chief financial officer, and Melodee Volosin, chief operating officer, are expected to remain in key roles in the new company.
Herb Baum, who was recently appointed executive chairman, will not remain with the company after the acquisition.
International Speedway Corp. promotes more than 100 racing events annually, and owns and/or operates 11 of the country’s major motor sportsrelated facilities, including the Phoenix track.
Speedway Motorsports owns and operates several racing facilities, provides souvenir merchandising services, and manufactures and distributes smaller-scale, modified racing cars.
The company also owns Performance Racing Network, which broadcasts syndicated motor sports programming to more than 710 radio stations nationally.
Action Performance recently announced a restructuring of its wholesale NASCAR die-cast distribution into a direct-to-retail model.
The initiative is expected to help the business through a lower cost structure, improved speed to market and earlier awareness of consumer trends, preferences and buying habits.
"As part of Motorsports Authentics, we believe Action has significant long-term potential for generating positive cash flow and earnings," said Lesa France Kennedy, president of International Speedway.
Action Performance’s stock, traded on the New York Stock Exchange, closed at $12.73 a share Tuesday, up 6.17 percent on volume of more than 5.27 million shares.
The stock’s 52-week high was $14.97, while the 52-week low was $8.
