Notwithstanding the concern over the potential conflict of interest with the FIA owning 1% of Formula 1, Liberty Media has upped its initial invest from 18.7% to 19.1% according to Forbes. The initial investment was agreed to back in September and it now seems an additional $13 million have been invested.
It is an interesting move in that the agreed price for Liberty Media’s investment was placed at $4.4 billion with an initial buy-in and then the completion of the purchase through stock. Forbes said:
“The $4.4 billion purchase price comprises $1.1 billion in cash with the remainder coming from shares in Liberty which is listed on the Nasdaq and owns stakes in companies such as Time Warner, Viacom and event promoter Live Nation.
The 0.4% stake was acquired on 27 October but this is not a new deal. Instead Liberty agreed to buy it in September when it paid $746 million in cash for an 18.7% stake in F1’s parent company Delta Topco. It is controlled by the private equity firm CVC which owns a 38.1% stake in the company. Liberty has not yet acquired any shares from CVC but control will change hands if the takeover gets regulatory and shareholder approval. This is when the remainder of the cash and the shares will be transferred to the sellers.”
One of the components of this sale, in fact the biggest component, is the payment via Liberty Media shares to the tune of over $3 billion. It is a big company but perhaps it is not as flush with cash as it is vision in re-shaping the company into a much bigger enterprise by acquisition and leveraging the entire operation for a long-term strategy. There is no crime in having an appetitive in getting in bed with CVC Capital and having them on the board of Liberty Media and expanding overall entity ownership as that typically brings in more specialties, connections and opportunities. Sans cash, ceding ownership position to others who can impact your bottom line and compliment your growth strategy can make sense.
Perhaps the bigger question is the EU’s position on the sale of CVC’s holdings and the FIA’s entanglement. Time will tell but the dust is far from settled here. We’ve seen a lot of video of Chase Carey in the paddock and journalists speaking as if he is already in control but that doesn’t seem to be the case yet.
Hat Tip: Forbes