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Liberty Media Seeks Investor Support for Formula One Buyout

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To draw support for the much-publicized purchase of Formula One Group, Liberty Media Corporation has entered into an agreement with several third-party investors. Notably, Liberty Media has issued series C common stock worth $1.55 billion at a rate of $25 per share for the purpose. The group of investors includes Coatue Management, L.L.C., the D. E. Shaw group, JANA Partners LLC, Ruane, Cunniff & Goldfarb Inc., Soroban Capital Partners LP, SPO Advisory Corp. and Viking Global Investors LP. The proceeds from this will be utilized to buy back shares of CVC Capital Partners – the selling shareholders of Formula One Group. The third-party investors will collectively own 26% of Formula One Group.

This September, Liberty Media had agreed to purchase Formula One Group – the highest class of single-seat auto racing in the world endorsed by the Fédération Internationale de l'Automobile (“FIA”). Interestingly, the company was vying for a 49% stake in Formula One in 2014 in collaboration with Discovery Communications Inc. .

Benefits

Boasting the highest class of auto racing in the world, Formula One is popular and followed globally by motorsports fans as well as wealthy individuals. This makes the sport a great value proposition for pay-TV operators. Thus, Liberty Media can benefit from a stake in Formula One through increased revenues from the same. Additionally, Liberty Interactive Corporation’s subsidiaries like QVC can benefit from the online sales of Formula One-related merchandise. However, the sport is expected to have a tough competition from NASCAR and Verizon Communications Inc. (VZ - Free Report) sponsored INDYCAR series in the U.S.

Liberty Media presently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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