Technology entrepreneur Halsey Minor has made a cash offer to MI Developments to purchase all the company's racing-related assets for between $300 million and $320 million.
In a letter to a special committee of MID’s board of directors, Minor Racing LLC made an all-cash offer, subject to customary due diligence, of $150 million to $170 million for Santa Anita Park, Golden Gate Fields, Portland Meadows, the Maryland Jockey Club, AmTote, XpressBet.com, and HRTV. Additionally, Minor offered to acquire Gulfstream Park, Palm Meadows Training Center, and all other Florida-based racing assets for $150 million.
Minor, the principal of Minor Racing, also told the committee in his letter that the inclusion of non-core racing assets in MID’s portfolio has been “significantly detrimental to the interests of the company’s shareholders.”
“We further believe that selling the racing assets at a fair price would enable the board of directors, should it determine that sale of the company is in the best interests of its shareholders, to achieve a significantly better price than the current offer,” Minor wrote to the MID board.
“I have started several successful media and technology companies, and each time success came by tirelessly driving innovation,” Minor said in a statement. “Modern horse racing is one of the least innovative sports. I believe by making significant digital advancements, horse racing can become one of the most innovative sports and capture the attention and imagination of a whole new generation.”
The timing is curious considering that in October an entity controlled by the family of Frank Stronach, known at ST Acquisition, offered to purchase any or all of the outstanding stock it doesn’t already own in MID. ST Acquisition has offered $13 in cash per share. With 46.7 million MID shares outstanding, the ST Acquisition deal is valued at about $607 million.
Information released by ST Acquisition said the entity and its affiliated and associated entities currently own an aggregate of 50,000 Class A Subordinate Voting Shares and 383,414 Class B Shares of MID, which together represent approximately 60% of the total voting power of MID’s outstanding shares.
MID chairman Dennis Mills said he could not comment on Minor’s offer.
“During this period when the controlling shareholder has made an offer to privatize the company, the executive team is like Switzerland, so I have no comment,” Mills said.
Stronach could not be reached for comment.
Minor said the offer is part of his three-step plan for reversing the 60-year decline of interest in Thoroughbred racing. The plan includes purchasing and/or leasing existing venues; adding innovative new technologies and improving overall quality of service and experience; and building new experience and place-based venues that transform Thoroughbred racing into the world’s most entertaining and innovative sport.
Minor said he has already proven the ability to deliver 4K2K video, which he said is 10 times more crisp than high definition, throughout a racing facility or to an off-site location. He said the video technology can capture the finish of a race at 1,200 frames per second, which would allow the last few seconds of a race to be played out over 30 seconds in slow motion.
He also said he has the technology to create as many as 25 different views in 3-D so viewers can “walk around the image of a live race on the screen—without glasses of any kind.”
“MI Developments could be worth substantially more than it is today if the special committee and the board accept Minor Racing’s offer to purchase the non-core, poorly performing horse racing assets that just six months ago were operated into bankruptcy,” Minor said. “Horse racing assets were never purchased based on any announced strategic plan by MI Developments. Quite the opposite. They were added because of their diminished value after the lengthy and disruptive bankruptcy of the former Magna Entertainment.”