Liberty Media wins F1 deal investment
December 15, 2016
By Colin Mann
Liberty Media Corporation has entered into agreements with certain third party investors to commit $1.55 billion (€1.46bn) in subscriptions for newly issued shares of its Series C Liberty Media common stock (LMCK) at a price of $25.00 per share in connection with its acquisition of Formula 1.
The third parties are Coatue Management, the D. E. Shaw group, JANA Partners, Ruane, Cunniff & Goldfarb, Soroban Capital Partners, SPO Advisory Corp, and Viking Global Investors (the Third Party Investors). The issuance of the shares of LMCK to the Third Party Investors will be consummated concurrently with the completion of the Formula 1 acquisition.
“We are excited that this impressive list of investors will participate in the acquisition of Formula 1,” declared Greg Maffei, President and Chief Executive Officer of Liberty Media. “This group shares our enthusiasm for the sport and our belief in the opportunity to develop and grow it for the benefit of the fans, teams, sponsors and our shareholders. We look forward to closing the transaction in early 2017.”
Chase Carey, Chairman of Formula 1, said: “This is a significant step in Liberty Media’s transformative acquisition of Formula 1 and is further confirmation that the future of the sport is bright.”
The proceeds from this $1.55 billion investment will be used to increase the cash portion of the aggregate consideration payable to the consortium of selling Formula 1 shareholders (the Selling Shareholders) led by CVC Capital Partners (CVC).
As a result of this investment, the number of LMCK shares issuable to the Selling Shareholders at the closing of the Formula 1 acquisition will be reduced from approximately 138 million to approximately 76 million. The total number of LMCK shares to be issued by Liberty Media in connection with the acquisition of Formula 1, to both the Selling Shareholders and the Third Party Investors, remains unchanged at approximately 138 million shares (excluding the dilutive impact of the $351 million Exchangeable Notes). Both the Third Party Investors and the Selling Shareholders will be subject to certain lock-up restrictions for a period of six months following the completion of the Formula 1 acquisition, subject to certain exceptions. Information regarding these lock-up restrictions can be found in the definitive proxy statement filed by Liberty Media with respect to the special meeting of stockholders (described below) and in a future Current Report on Form 8-K to be filed by Liberty Media.
The interest in Formula 1 already acquired by Liberty Media, and the remaining interest to be acquired upon the closing of the acquisition, is being attributed to the Liberty Media Group tracking stock. Upon completion of the acquisition, subject to stockholder approval, 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 common stocks will be changed from LMC (A/B/K), respectively, to FWON (A/B/K), respectively.
Following the completion of the Formula 1 acquisition and the issuance of shares to the Third Party Investors, the Third Party Investors in the aggregate will own approximately 26 per cent of the Formula One Group’s equity, and the Selling Shareholders will own approximately 39 per cent) of the Formula One Group’s equity and will have board representation at Formula 1 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.
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 1, and (iii) the approval by Liberty Media’s stockholders of the issuance of LMCK shares in connection with the acquisition (including the issuance to the Third Party Investors) at the special meeting scheduled for January 17th 2017. The acquisition is expected to close before the end of the first quarter in 2017. At the special meeting, Liberty Media’s stockholders will also be asked to approve the name change of the Liberty Media Group to the Formula One Group. However, the approval of the name change proposal is not a condition to closing the Formula 1 acquisition. Additional information regarding the acquisition and Formula 1 has been included in the definitive proxy materials 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.
Liberty Media confirmed September 8th that it was to acquire Formula One from a consortium of sellers led by CVC. The deal, involving cash and newly issued shares in the Liberty Media Group tracking stock and a debt instrument exchangeable into shares of LMCK, represented an enterprise value for Formula One of $8 billion and an equity value of $4.4 billion.