Thursday, May 23, 2024

Liberty Media to Buy Motorcycle Racing Circuit MotoGP in Deal Valuing Its Owner at $4.5B

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Formula 1 owner Liberty Media, led by chairman John Malone and CEO Greg Maffei, has struck a deal to acquire a big majority stake in the company behind the motorcycle racing circuit MotoGP in a deal that puts an enterprise value of 4.2 billion euro ($4.5 billion) on the firm.

The deal for Madrid-based Dorna Sports, which is the commercial rights holder for MotoGP, comes after the likes of UFC and WWE owner TKO Group, run by Ari Emanuel, and Qatar Sports Investments had also looked at a possible takeover, according to reports.

Liberty said the transaction also amounts to an equity value of 3.5 billion euro ($3.8 billion) for the company, “with the existing debt balance at MotoGP expected to remain in place after close.” Liberty said it will attribute MotoGP to its Formula One Group tracking stock and expects to pay for the business with approximately 65 percent in cash and 21 percent in shares of Liberty Formula One common stock.

The acquisition is expected to be completed by year-end 2024 and is subject to “the receipt of clearances and approvals by competition and foreign investment law authorities in various jurisdictions,” Liberty said.

Dorna’s current owners include financial firms Bridgepoint Capital, based in the U.K., and the Canada Pension Plan (CPP) Investments, headquartered in Canada. Dorna, led by longtime CEO Carmelo Ezpeleta, also promotes such competitions as the Superbike World Championship and the electric biking series MotoE. 

Under the ownership of Liberty Media, Formula 1 has looked to expand its racing schedule and take the circuit to additional media platforms, including an increased social media presence and the Netflix reality series Drive to Survive, produced by Box to Box Films. It has also focused on expanding marketing partners, including a promotional partnership with streaming service Paramount+.

The deal is expected to face regulatory hurdles, the Financial Times recently reported. After all, the private equity firm CVC Capital Partners tried to own both Formula One and MotoGP, but ended up having to sell the latter in 2006 to sell European Union competition regulators’ approval of buying Formula One.

“We are thrilled to expand our portfolio of leading live sports and entertainment assets with the acquisition of MotoGP,” said Greg Maffei, Liberty Media’s president and CEO. “MotoGP is a global league with a loyal, enthusiastic fan base, captivating racing and a highly cash flow generative financial profile.” He added: “The business has significant upside, and we intend to grow the sport for MotoGP fans, teams, commercial partners and our shareholders.”

Added Ezpeleta: “This is the perfect next step in the evolution of MotoGP, and we are excited for what this milestone brings to Dorna, the MotoGP paddock and racing fans.”

Goldman Sachs is acting as financial advisor to Liberty Media and providing debt financing for the transaction, while O’Melveny & Myers is acting as legal counsel. Moelis & Co. is acting as financial advisor to Dorna, with Latham & Watkins acting as legal counsel.

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