Formula One CEO Bernie Ecclestone is "preparing to sell
as much as half his stake" in Formula One Administration
(FOA), the company that "controls" the sport, in a deal
valued at $1.3B, according to Targett, Harverson & Griffiths
of the FINANCIAL TIMES. Morgan Grenfell Private Equity, a
division of the Deutsche Bank, is "understood to have
bought" a 12.5% stake for $325M, with an option to "buy a
further" 37.5% stake valued at $975M. The deal is "expected
to be confirmed" today. Meanwhile, 21 Investimenti, the
private equity arm of the Benetton and Bonomi trading
family, which is "linked" to the Benetton F1 team, is
"understood to be close to buying" part of the 37.5% stake
in FOA on which Morgan Grenfell has an option. The deal,
which "suggests" FOA's total value is $2.6B, "has been
struck" with Bambino Holdings, Ecclestone's family trust
that "benefited" from a $1.4B Eurobond issue backed by F1's
TV revenues earlier this year. Targett, Harverson &
Griffiths write, "The bond issue and the planned equity sale
are part of a process which Mr. Ecclestone intends to lead
to a stock market flotation of FOA, probably within the next
two years." FOA is "expected to earn a profit" of about
$200M on revenues of $400M this year, "most of which come
from the sale" of TV rights (FINANCIAL TIMES, 10/26).
RISKY BUSINESS? In a sidebar, Targett, Harverson &
Griffiths write that Morgan Grenfell was "drawn to F1 by the
prospect of boosting the commercial potential" of a sport
with a large worldwide TV audience. A venture capitalist
said that there is "much untapped potential" in F1: "The
events last for three days and -- apart from the racing --
there's not much to do." Morgan Grenfell may seek "more
corporate hospitality" for future races (F. TIMES, 10/26).
The FINANCIAL TIMES' "Lex Column" states that Morgan
Grenfell is "taking a gamble on the governance structure of
the business it is buying. ... Ecclestone is the driving
force behind the company [but] his recent ill-health raises
an obvious succession issue" (FINANCIAL TIMES, 10/26).
