Ten years after buyout powerhouse CVC Capital Partners bought Formula One for an estimated $1.7 billion, the global motorsports entertainment franchise has been sold to US cable giant Liberty Media in a deal that values the company at $8 billion.
The equity is valued at $4.4 billion, CVC and Liberty Media said in a joint statement.
CVC bought Formula One in March 2006 from its €6 billion, 2004-vintage European Equity Partners IV fund. Institutional investors in the fund include the California Public Employees’ Retirement System, the California State Teachers’ Retirement System, and the State of Wisconsin Investment Board, according to PEI data.
The acquisition will consist of cash and newly issued shares in Liberty Media Group tracking stock (LMCK) – stocks that enable investors to invest in a specific, often fast-growing unit in a company – as well as a debt instrument exchangeable into shares of LMCK.
Englewood, Colorado-based Liberty Media, the world’s largest international cable company with 27 million customers, is buying 100 percent of the shares in Formula One’s parent company, Delta Topco, from a consortium of sellers led by CVC.
The acquisition will proceed in stages. Liberty Media has taken an 18.7 percent minority stake in Formula One, paying $746 million in cash; this is equal to $821 million in consideration minus a $75 million discount, to be repaid by Liberty Media to the shareholders selling their stakes once the acquisition is completed.
Liberty Media said it will be renamed the Formula One Group after the acquisition is complete.
CVC and the consortium of sellers will own about 65 percent of the Formula One Group’s equity, and will have board representation at Formula One, “to support Liberty Media in continuing to develop the full potential of the sport”, CVC and Liberty Media said.
A CVC representative who has yet to be named will also join the Liberty Media board of directors.
Chase Carey, vice chairman at 21st Century Fox who is known for his deal-making expertise, is taking up a new position as chairman of Formula One, replacing Peter Brabeck-Letmathe, who remains at the company as a non-executive director on Formula One’s board. Bernie Ecclestone, Formula One’s chief executive, will remain in his current role.
“We are delighted Chase Carey is joining Formula One as its new chairman and that he will be working alongside Bernie Ecclestone,” Donald Mackenzie, co-chairman of CVC, said in a statement.
“Chase’s experience and knowledge of sport, media and entertainment is as good as it gets and we are very pleased to secure his services. Bernie has been a wonderful CEO for us over the last 10 years. There have been many successes and the occasional challenge but there has never been a dull moment and we have had a lot of fun,” he added.
The acquisition is expected to close by the first quarter of 2017, subject to certain conditions, including regulatory approval and the approval of Liberty Media’s stockholders of the issuance of LMCK shares.
Morgan Stanley is financial advisor to Liberty Media, with Baker Botts providing legal advisory services. Goldman Sachs is financial advisor to Delta Topco, while Freshfields Bruckhaus Deringer and Weil, Gotshal & Manges are serving as legal advisers.
Formula One will continue to be headquartered in London.
PEI reported in June that CVC is in preliminary discussions with investors about launching a €12.5 billion ($14 billion) buyout fund in the first half of 2017. The fund, which will be the firm’s seventh flagship offering, will have a hard-cap of €15 billion ($17 billion), people familiar with the matter told Bloomberg.
CVC declined to comment to PEI on the proposed fundraise. The firm is currently investing CVC European Equity Partners VI, which closed on €10.9 billion ($12.3 billion) in 2013. CVC ranked seventh in this year’s PEI 300, having amassed just under $23.5 billion over the last five years.