Liberty Media’s John Malone just crossed the finish line in his effort to craft a deal to buy the Formula One car racing circuit — potentially positioning it to challenge NASCAR’s domination of the U.S. racing market.
Malone’s company agreed to pay $4.4 billion, giving Formula One an enterprise value of $8 billion when you include its debt.
Former Fox COO Chase Carey is the new chairman, and the racing group’s CEO, Bernie Ecclestone, will keep his job. He owns 5.3% of the company and his family owns an additional 8.5%. Formula One is owned by a consortium of companies led by CVC Capital Partners.
“I greatly admire Formula One as a unique global sports entertainment franchise attracting hundreds of millions of fans each season from all around the world,” Carey says. “I see great opportunity to help Formula One continue to develop and prosper for the benefit of the sport, fans, teams and investors alike.”
Formula One has some of the racing world’s top events, including the Grands Prix. Liberty owns the Atlanta Braves and Sirius XM, and either it or Malone have major stakes in Charter Communications, Discovery Communications, Starz, Live Nation, and Lionsgate.
Malone’s agreement underscores the high value of live sports, including those that appeal to niches of viewers, at a time when many TV viewers time shift programming to avoid ads. In July, WME-IMG led a consortium that agreed to pay $4 billion for the UFC, the world’s leading mixed martial arts franchise.
Liberty has already paid $746 million for 18.7% of Formula One. It will fund the rest of the acquisition, expected early in 2017, with $1.1 billion in cash, 138 million newly issued Liberty shares, and $351 million in debt that Formula One can exchange into Liberty shares. Malone’s company will assume $4.1 billion of Formula One’s debt.
Teams will have an opportunity to invest in Formula One, Liberty says.
Liberty Media Corp will give a new name to its Liberty Media Group, which has three tracking stocks: It will become the Formula One Group.
The agreement needs to be approved by antitrust officials in several countries; Formula One’s governing body, the Fédération Internationale de l’Automobile; and Liberty shareholders.