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Liberty Media (LMCA) Vying for a Stake in Formula One Group

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Liberty Media Corporation has reportedly moved closer to buying a minority stake in Formula 1 – the highest class of single-seat auto racing in the world, endorsed by the Fédération Internationale de l'Automobile (FIA). The company is believed to have had talks with CVC Capital Partners, which holds a 35% stake in Formula 1. Additionally, as per numerous reports, Liberty Media is eyeing a two-phase takeover of Formula One Group, starting with a minority stake followed by a majority interest later, with an aggregate payment of about $8.5 billion. Formula One Group will then be integrated into Liberty Media. Notably, Liberty Media is controlled by American business tycoon, John Malone.

Other Bids

As per reports, Liberty Global plc (LBTYA - Free Report) , a company also owned by John Malone and Discovery Communications Inc. , is also trying to buy a stake in Formula One Group. At present, CVC Capital and Bernie Ecclestone, the CEO of Formula One's management, hold the majority of the company’s shares. However, even if the deal goes through, Ecclestone would continue to head Formula 1. Ecclestone has also indicated that he will not be selling his stake in the company. The Chairman of CVC Capital Partners, Donald Mackenzie, is also not keen on selling his stake in the company at the moment.

Benefits

Being the highest class of auto racing in the world, Formula 1 is popular and followed by wealthy individuals as well as a range of motorsports fans globally. This makes the sport a great value proposition for pay-TV operators. Thus, Liberty Media will benefit from increased revenues from these pay-TV operators with a potential acquisition of a stake in Formula 1. Additionally, Liberty Interactive Corporation’s subsidiaries like QVC can leverage the online sales of Formula One-related merchandise.

Liberty Media Corporation presently carries a Zacks Rank #3 (Hold).

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