Liberty Media buys F1 for $4.4 billion
After years of broken promises, the sale of F1 has finally taken place. American media group Liberty Media made the best offer, valuing the sport at $4.4 billion.
CVC Capital executed an excellent financial operation by acquiring the entire capital of Formula 1 in 2006 for the sum of 1.8 billion euros.
Such an amount had already been largely recouped even before the final sale, as the investment fund had already paid a dividend of one billion dollars in 2012, before selling a first tranche of 21% of the capital for 1.6 billion dollars a few months later.
If multiple attempts to go public have failed, it is therefore a full stake acquisition that is materializing. Thus, John Malone’s group has already acquired 18.7% of Delta Topco’s capital, the holding company that owns F1, in exchange for a payment of 746 million dollars, fully made in cash.
To finance the complement, the media group will use three different means: cash (for a total of $1.1 billion), the issuance of 138 million new Liberty Media shares, and a debt instrument worth $351 million, convertible into Liberty Media shares. The company’s value thus reaches eight billion dollars as the new shareholder takes on the $3.6 billion of debt incurred by the previous shareholders to finance dividend payments and thereby multiply their return on investment.
A new development is that the sales process also stipulates that teams can become shareholders, which has never been the case until now. This would bring us closer to the model implemented by American sports, such as the NBA, where different franchises are the owners of their own sport, allowing the interests of all parties involved to be aligned.
Liberty Media thus has extensive experience in managing sports franchises as they already own the Atlanta Braves baseball team while also being at the helm of the Formula E championship, as explained by Greg Maffei, CEO of Liberty Media: “We look forward to being part of Formula One. We believe that our long-term perspective and expertise in media and sports assets will enable us to be good stewards of Formula 1 and will benefit the fans, teams, and shareholders.”
As part of this change in shareholders, it has also been decided to replace Peter Brabeck as chairman of the board with Chase Carey, who was until now vice-chairman of Century Fox. However, the CEO of F1 remains Bernie Ecclestone, despite Eddie Jordan’s statements over the weekend at Monza.
With the participation of www.racingbusiness.fr
