Liberty Media buys Formula 1 for $ 4.4 billion

Billionaire John Malone’s Liberty Media Corporation will take control of the Formula 1 (F1) racing series for $ 4.4 billion, according to the Financial Times (FT). The deal comes in two stages: first, the American media company buys an 18.7% stake in Delta Topco, the parent of Formula 1, from a consortium of investors led by private equity fund CVC Capital Partners for $ 746 million. This part of the deal involves cash settlements.

The second phase should be completed in early 2017 after receiving approval from regulators and Liberty shareholders. For control of the racing series, she will pay another $ 354 million in cash and $ 3.3 billion in the form of targeted shares of the newly created division of the American corporation – Formula One Group. As a result of the deal, Liberty will gain control of Formula One Group and a 35% stake, with the remaining 65% going to CVC Capital Partners and other current owners of the racing series.

In addition, Liberty takes on Formula 1 debts in the amount of $ 3.6 billion, thus the American corporation valued the entire F1 business at $ 8 billion.

Chase Carey, former vice president of 21st Century Fox, owned by media mogul Rupert Murdoch, will take over as chairman of Formula 1. Bernie Ecclestone will remain President of Formula 1, but he has agreed to sell his and his family’s 15% stake as part of the deal. Carey told the FT that Ecclestone can stay at the helm of F1 for as long as necessary. “We will work together as long as our partnership benefits business and sports. [Экклстоун] deserves trust and respect for everything he has done for Formula 1, ”he added.

In 2014, Ecclestone had to pay $ 100 million to end a trial for corruption and fraud. Despite Ecclestone’s controversial reputation, Liberty Media CEO Greg Maffei told the FT that he is delighted to be working with him. “Bernie was a great president. With him, we have achieved numerous successes, from time to time there were difficult moments, but it was never boring, “- quoted by The Wall Street Journal, the statement of CVC co-president Donald Mackenzie.

CVC representatives will remain on the F1 board of directors to “support Liberty Media in developing the sport’s full potential,” and one CVC representative will also serve on Liberty Media’s board of directors.

The announcement of the deal ended a multi-month period of rumors and speculation about the future of F1. The Liberty wasn’t the only contender for the racing championship. In addition, Malone’s media empire had previously tried to gain control of F1, but the deal fell through in 2014.

As a result of the current deal, Liberty gained control of one of the most profitable global sports, as well as the rights to television and online broadcasts. Top managers of the American corporation promise to use their knowledge of the specifics of the local market to promote F1 races in the United States.

CVC says they are happy with the agreement. “We retain our stake in a business with significant profit potential. But – let’s be clear – we are handing over the leading role in it to Liberty, ”Mackenzie said.

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