Formula One: Liberty Media Corporation Agrees to Acquire Formula One – Press Release in Full

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Liberty Media Corporation earlier today confirmed the agreement to acquire Formula One. The Liberty Media press release can be found in full here:

Liberty Media Corporation  and CVC Capital Partners (“CVC”) announced today that Liberty Media has agreed to acquire Formula One, the iconic global motorsports business, from a consortium of sellers led by CVC.

Liberty Media owns interests in a broad range of media, communications and entertainment businesses. Those interests are attributed to three tracking stock groups: the Liberty SiriusXM Group, the Liberty Braves Group, and the Liberty Media Group.

The consideration comprises cash and newly issued shares in the Liberty Media Group tracking stock (LMCK) and a debt instrument exchangeable into shares of LMCK. The transaction price represents an enterprise value for Formula One of $8.0 billion and an equity value of $4.4 billion(1).

The acquisition will be effected by Liberty Media acquiring 100% of the shares of Delta Topco, the parent company of Formula One (Delta Topco herein referred to as “Formula One”)(2). The acquisition is subject to the satisfaction of certain conditions and is described in more detail below.

Concurrent with the execution of the agreement to effect the acquisition, Liberty Media has completed the acquisition of an 18.7% minority stake in Formula One for $746 million, funded entirely in cash (which is equal to $821 million in consideration less a $75 million discount to be repaid by Liberty Media to selling stockholders upon completion of the acquisition). Prior to completion, CVC Funds will continue to be the controlling shareholder of Formula One.

After completion of the acquisition, Liberty Media will own Formula One and it will be attributed to the Liberty Media Group which will be renamed the Formula One Group. The consortium of sellers led by CVC will own approximately 65%(1)(3) 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. In addition, a CVC representative will be joining the Liberty Media Board of Directors.

Chase Carey has been appointed by Delta Topco and will serve as the new Chairman of Formula One, succeeding Peter Brabeck-Letmathe, who will remain on Formula One’s board as a non-executive director. Bernie Ecclestone will remain Formula One’s CEO.

Greg Maffei, President and Chief Executive Officer of Liberty Media, said: “We are excited to become part of Formula One. We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula One and benefit fans, teams and our shareholders. We look forward to working closely with Chase Carey and Bernie Ecclestone to support the next phase of growth for this hugely popular global sport.”

Chase Carey, Chairman of Formula One, said: “I am thrilled to take up the role of Chairman of Formula One and have the opportunity to work alongside Bernie Ecclestone, CVC, and the Liberty Media team. 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. I see great opportunity to help Formula One continue to develop and prosper for the benefit of the sport, fans, teams and investors alike.”

Bernie Ecclestone, Chief Executive Officer of Formula One, said: “I would like to welcome Liberty Media and Chase Carey to Formula One and I look forward to working with them.”

Donald Mackenzie, Co-Chairman of CVC, commented: “We are delighted Chase Carey is joining Formula One as its new Chairman and that he will be working alongside Bernie Ecclestone. 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. The combined skills of Chase and Bernie mean that the successes should continue and we wish them well. We would like to thank Peter Brabeck-Letmathe for his outstanding contribution during his tenure as Chairman. His leadership has served the company well, and we are pleased that he will remain on the board as a non-executive director.”

In the acquisition the selling stockholders will receive a mix of consideration comprising: $1.1 billion in cash, 138 million newly issued shares of LMCK and a $351 million exchangeable debt instrument to be issued by Formula One and exchangeable into shares of LMCK. Funding for the cash component of the acquisition is expected to come from cash on hand at the Liberty Media Group. The newly issued LMCK shares will be subject to market co-ordination and lock-up agreements.

The Teams will be given the opportunity to participate in the investment in Formula One, and the detailed terms of that investment will be agreed in due course. Certain teams have already expressed an interest in investing after completion of the acquisition.

The interest in Formula One already acquired by Liberty Media, and the remaining interest to be acquired upon the closing of the acquisition, along with $4.1 billion of existing Formula One debt (which will be non-recourse to Liberty Media) and $0.7 billion in Formula One cash, is being attributed to the Liberty Media Group tracking stock.

Upon completion of the acquisition, the Liberty Media Group will be renamed the Formula One Group and the ticker symbols for the Series A, Series B and Series C Liberty Media Group tracking stocks will be changed from LMC (A/B/K), respectively, to FWON (A/B/K), respectively. Formula One will remain based in London.

The completion of the acquisition is subject to certain conditions, including the receipt of: (i) certain clearances and approvals by antitrust and competition law authorities in various countries, (ii) certain third-party consents and approvals, including that of the Fédération Internationale de l’Automobile, the governing body of Formula One, and (iii) the approval of Liberty Media’s stockholders of the issuance of LMCK shares in connection with the acquisition and the name change of the Liberty Media Group to the Formula One Group, and is expected to close by the first quarter of 2017. Additional information regarding the acquisition and Formula One will be included in a proxy statement to be filed by Liberty Media with the Securities and Exchange Commission relating to the matters to be voted upon by Liberty Media’s stockholders described above.

Formula One: Felipe Massa: a true fan favourite

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Felipe Massa has been a major force in Formula One ever since breaking onto the scene at Sauber in 2002. The Brazilian has enjoyed plenty of success over the years, finishing second to Lewis Hamilton in dramatic style on the final day of the 2008 season as well as helping Ferrari to win back-to-back Constructors’ World Championship awards in 07 and 08.
On September 1st, Massa announced that he would be retiring from Formula One at the end of the current campaign – a decision that was met with shock and despair across all four corners of the globe. In 2010, a FOTA-conducted survey found that Massa was voted by the fans as their fourth favourite driver in Formula One; and that helped Ferrari to emerge as the most popular team in the sport with supporters.

Williams haven’t been anywhere near as competitive this season but Massa has continued to defy the odds and is currently on track to secure yet another top 10 finish in the World Championship race. Prior to the 2016 campaign, the Brazilian had finished in the top 10 in nine of the last ten years – an impressive achievement to say the least.
As of September 2nd, Massa is valued at 4500/1 to win the Drivers title in the Championship betting odds but the Brazilian is in need of a minor miracle for this to happen. Instead, he will be fully focused on climbing up the leader board to cement his place in the top 10 – and he may help Williams climb up a few places in the Constructors’ standings too. After all, those extra few spots will help the team earn more prize money; and Massa will be desperate for an additional bonus before stepping away from the wheel.

Incredibly, the final race of the season will see Massa record his 250th appearance in a Grand Prix event; a phenomenal record. The 35-year-old will climb above the heroic David Coulthard in the all-time rankings for the total number of entries in Formula One. And while Massa has never won the title, he will go down in history with the likes of Rubens Barrichello as one of the best drivers to miss out on the coveted championship.
The Brazilian has failed to win a race since leaving Ferrari in 2013 but he has certainly been enjoying his driving under a fairly solid setup at Williams. His legacy at Williams will stay but it will be his 11 victories for the Italian team that will live long in the memory. After all, Massa will be remembered mostly for his time at Ferrari; whether that is alongside Michael Schumacher, Kimi Raikkonen or Fernando Alonso.
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Massa will be remembered as one of Formula One’s nice guys – and rightly so. The 35-year-old has been a pivotal figure in motorsport in recent times and he has earned the right to sign out when the time is right for him. F1 fans will be sad to see Massa go but we will never forget his finest moments.