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Formula One Deal Could Be A Game Changer For Liberty Media

Formula One Deal Could Be A Game Changer For Liberty Media

FBN Securities sees Liberty Media Group (NASDAQ: LMCA)'s Formula One deal as a game changer, given the $33.68 fair value for the company's shares, which is 17.54 percent above its current weighted average level.


The firm noted that Liberty Media announced its decision to buy Formula One from a consortium of sellers, led by CVC, on September 7. The deal values Formula One at an enterprise value of $8 billion and an equity value of $4.4 billion, with the deal value structured as $1.1 billion in cash and 138 million of newly issued Liberty Media shares.

On the completion of the deal, CVC will own 65 percent of the Formula One Groups' equity and will have board representation at Formula One. Formula One would be tagged to the Liberty Media's Liberty Media Group, which would be renamed to the Formula One Group, with the ticker to be renamed as LMC (A,B,K) to FWON (A,B,K).

Related Link: Liberty Media Shares Near Full Valuation

'Grand Slam' With Formula One

Analyst Robert Routh sees opportunities to augment Formula One's multiple, high margin revenue streams. The analyst termed the deal a "grand slam." The analyst also believes Liberty may be able to leverage what Formula One has with Live Nation Entertainment, Inc.(NYSE: LYV) and SIRI has in the future.

Concluding, the firm said the deal materially increases the fair value of Liberty Media Group's equity, if things are as it believes based on what it has read related to this. Furthermore, the firm has an Outperform rating on the stock.

At time of publication, Liberty Media was trading at $28.50, down 2.23 percent on the day.

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