A California high-tech entrepreneur is offering to buy most of the horse-racing assets controlled by Frank Stronach's MI Develpments complicating Mr. Stronach's own plan to take the company private.
Halsey Minor, who founded technology company CNet and later became embroiled in disputes with the state of California and lawsuits with auction houses, said Tuesday that he is offering at least $300-million (U.S.) for tracks in Florida, California, Oregon and Maryland plus other assets such as Internet betting service XpressBet and Horse Racing TV.
News of the offer sent shares of MI Developments sharply higher, gaining 76 cents or about 5 per cent to $16.21 on the New York Stock Exchange, well above the $13 offer Mr. Stronach announced last month in his bid to take out MI Developments' minority shareholders.
"Selling the racing assets at a fair price would enable the board of directors, should it determine that the sale of the company is in the best interests of its shareholders, to achieve a significantly better price than the current offer," Mr. Minor wrote in a letter to a special committee of the company's board.
His company, Minor Racing LLC, would pay between $150-million and $170-million for Santa Anita Park and Golden Gate Fields in California, Portland Meadows in Oregon and two tracks in Maryland, including Pimlico, home of the Preakness, which is the second jewel in horse racing's Triple Crown. In addition, Minor Racing is prepared to pay $150-million for Gulfstream Park in Florida and the rest of MI Developments' Florida assets.
MI Developments, the real estate arm of Mr. Stronach's empire, picked up the tracks and other assets out of the wreckage of Magna Entertainment Corp., (MEC) in which it held a controlling stake. MEC went into Chapter 11 bankruptcy protection in the United States in 2009.
The real estate company was also the major source of financing for the racetrack unit as it built up debts of more than $500-million before it went into Chapter 11 in March, 2009.
"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," Mr. Minor said in a statement.
"Modern horse racing is one of the least innovative sports," he added as he described a three-step plan to reverse the 60-year decline of thoroughbred racing in North America.
Innovative technologies would be introduced and Minor Racing would improve service and the customer experience; it would build new venues that transform thoroughbred racing; and purchase or lease existing venues.
Mr. Stronach controls MI Developments through multiple-voting shares that represent about 60 per cent of the votes.
His offer to buy the minority shares is worth about $600-million.
MI Developments chief executive officer Dennis Mills could not be reached for comment on the Minor Racing bid.
The company has not yet responded to Mr. Stronach's offer.
One of Mr. Minor's holdings is a company called Minor Family Hotels LLC, which went into Chapter 11 in September.