F1 sale to US group near finish line: Reports

Formula 1 cars go out on their first night of practice session for the Formula One SingTel Singapore Grand Prix 2008.
Formula 1 cars go out on their first night of practice session for the Formula One SingTel Singapore Grand Prix 2008. PHOTO: ST FILE

MONZA (Italy) • The long-awaited sale of Formula One to an American media group will be completed this week, according to media reports yesterday.

The well-sourced German magazine Auto Motor und Sport said the sport's veteran commercial supremo Bernie Ecclestone had confirmed the deal at the Italian Grand Prix.

The magazine reported Mr Ecclestone as saying that Liberty Media Group will make the first of two payments tomorrow in a deal valued at US$8.5 billion (S$11.6 billion).

If that goes through, according to well-informed paddock sources, current owners CVC Capital Partners, which hold a 35 per cent stake, will leave the sport.

Liberty, which is listed on the New York Stock Exchange, is expected to take control of the company that will run Formula One (F1).

F1's other major shareholder is US fund manager Waddell & Reed with 20.9 per cent. Mr Ecclestone holds 5.3 per cent and his Bambino Trust has another 8.5 per cent.

Recent media reports had said British broadcaster Sky as well as a consortium of Liberty's sister company Liberty Global and Discovery Communications were also circling F1. CVC, Liberty and Waddell & Reed did not comment on the Auto Motor und Sport report.

Mr Ecclestone, 85, said his future with the business would remain in his hands.

He told Auto Motor und Sport: "I will do what I have always done. What role I play is my decision."

According to Forbes, Formula One has been one of CVC's most lucrative investments as it has extracted US$4.4 billion from dividends and the sale of stakes in the business.

If its 35 per cent stake sells for anything close to its value pro rata in the latest valuation, then CVC could be on track to make US$7.6 billion from F1.

It would give CVC a 6.9 times return on the US$965.6 million that it invested in 2006 when F1 was valued at US$2 billion.

It seems highly unlikely that Liberty would be able to repeat this feat, Forbes' analysts noted .

To do so would require F1 hitting a value of US$41.4 billion by 2026, which is hard to imagine as Mr Ecclestone has done too good a job at maximising its potential already.

AGENCE FRANCE-PRESSE, REUTERS

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A version of this article appeared in the print edition of The Straits Times on September 05, 2016, with the headline 'F1 sale to US group near finish line: Reports'. Print Edition | Subscribe