Blog Coverage Following Blessings from FIA for the Acquisition of Formula 1, Liberty Media Proceeds to the Next Step
LONDON, UK / ACCESSWIRE / January 20, 2017 / Active Wall St. blog coverage looks at the headline from Liberty Media Corp. (NASDAQ: LMCA) (NASDAQ: LMCK) as the Company announced on January 19, 2017, the private issue of Cash Convertible Senior Notes to raise $400 million. The said funds would be utilized to increase the cash portion in the acquisition of Formula 1. The announcement comes a day after Liberty Media received the final approval for the acquisition of Formula 1 from the Fédération Internationale de l'Automobile (FIA) the governing body of Formula 1, on January 18, 2017. Register with us now for your free membership and blog access at:
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The Senior Notes will be converted to cash with the proceeds to be utilized to increase the cash component of the acquisition of Formula 1. At the share purchase price of $21.26, Liberty Media would be able to buy approximately 19 million Series C Liberty Media common stock (LMCK) with $400 million. These shares would otherwise have to have been issued to the seller of Formula 1. These shares will be held in treasury till the finalization of the acquisition. Liberty Media expects to complete the acquisition of Formula 1 by the end of January 2017.
Commenting on the issue of senior notes and the Formula 1 acquisition, Greg Maffei, President and CEO of Liberty, said:
"We think it's important to offer the teams the chance to invest in F1 and further align our interests. We look forward to working with the teams to increase the appeal of this iconic sport and enhance the F1 business."
Chase Carey, Chairman of F1, added:
"Several of the teams have expressed interest in investing and we have already begun productive discussions to make the sport more competitive and even more exciting."
Allocation of the Cash Convertible Senior Notes
In September 2016, Liberty Media announced that it would acquire global motorsports business Formula 1 from a consortium led by CVC Capital Partners for $4.4 billion. The cash and stock deal included 138 million freshly issued Series C Liberty Media's common stock. The issue of the cash convertible senior notes will not impact the number of LMCK's shares; however, it will change how the shares are allocated. Out of the total 138 million shares, 57 million shares will be given to the shareholders of the sellers, 62 million shares will be allocated for third-party investors' and 19 million shares will be deposited into the treasury.
In the event that the shares are not issued to allocated parties within six months of the completion of the acquisition, the shares will be retired. In the unforeseen event of the acquisition not being completed, Liberty Media will use the funds from the sale of the shares for general corporate purposes.
The various debts incurred by Liberty Media together with the current issue of senior notes include $1 billion 1.375% convertible notes due in 2023, $445 million Time Warner Inc. exchangeable debentures due in 2046, $350 million drawn under a Live Nation margin loan, $36 million of other corporate debt as of September 30, 2016, and approximately $4.1 billion of existing F1 debt as of July 31, 2016.
Race towards Formula 1 acquisition
September 07, 2016, Liberty Media announced the acquisition of global motorsports business Formula One.
December 14, 2016, Liberty Media arranged to get $1.55 billion funding through third-party investor agreements in a cash debt against Liberty Media Series C common stock.
December 16, 2016, Liberty Media gets the requisite approvals from Anti-trust authorities.
January 17, 2017, Liberty Media holds a special meeting of its shareholders and clears proposals relating to the acquisition of Formula 1.
January 18, 2017, Liberty Media crosses the final hurdle in the Formula 1 acquisition and gets the coveted consents and approvals from the Fédération Internationale de l'Automobile (FIA), the governing body of Formula 1.
January 31, 2017, Liberty Media expects to complete the acquisition of Formula1 before this date.
Stock Performance
At the closing bell, on Thursday, January 19, 2017, Liberty Media Class A stock fell 2.98%, ending the trading session at $28.31. A total volume of 1.40 million shares were traded at the end of the day, which was higher than the 3-month average volume of 349.37 thousand shares. In the last six months and previous twelve months, shares of the Company have surged 36.17% and 16.68%, respectively. Shares of the company have a PE ratio of 7.91 and have a market capital of $14.19 billion.
Liberty Media Class B share price finished yesterday's trading session at $27.84, slipping 4.40%. A total volume of 2.02 million shares exchanged hands, which was higher than the 3 months' average volume of 291.21 thousand shares. The stock has rallied 34.56% and 14.58% in the last six months and past twelve months, respectively. The stock is trading at a PE ratio of 147.30 and currently has a market cap of $6.20 billion.
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