Formula 1: The GOAT

(There was an election in my country, Tanzania, and a protest erupted so they shut down the internet)

September 7, 2016, 10:32 PM

“Fatih! Fatih! Fatih!” Just as Fatih was preparing to go to sleep, he was interrupted by his mother rushing up the steps to his room, calling for him.

“Yes, Mom,” Fatih said, deciding to meet her on the way so she wouldn’t fall or injure herself in her rush.

“Did you see the article written by TC (theconqueror.com)?” she asked, pausing between words to catch her breath.

“About what?” Fatih asked, curious as to what article his company might have written that would warrant her reacting that way. His mind shifted to thinking that it might be a controversial, false, or harmful article that could kill their brand entirely.

In the past few years, the company had grown into a more typical news and content company, and they had been reducing their direct involvement, having already entrusted decision-making positions to professionals, while they only received quarterly reports or could receive more detailed ones if they asked for them.

It had grown to the point that no one interested in motorsports could go a day without referencing or consuming their content. Their number of reporters had already reached the hundreds, spanning different motorsports. They were best known for their docuseries, which had all been quite successful since the first season, with sponsors continuing to fight for placements within them and drivers doing the same. Gaining a spot within a docuseries guaranteed an additional spotlight and sponsors who wanted to appear through them. Some of the drivers even went on to be signed by driver academies after their performance was highlighted.

As a result of all that, they were quite disconnected from the company’s day-to-day operations, so anything happening was still a possibility for Fatih.

“Take a look at this,” Rümeysa, who had finally caught her breath, said, showing him her phone, which had the breaking news article written by his company.

’So today is when this happened!?’ Fatih raised his eyebrows after reading the article’s headline. Something he only knew was going to happen, but not when exactly, had finally occurred.

[Liberty Media Corporation Agrees to Acquire Formula One]

The acquisition of Formula One was finally going to happen, which meant the explosive growth of F1 was about to begin. The thing that excited him the most was that, thanks to the programs he had instituted, TheConqueror.com was among the companies that Liberty Media would want to acquire in order to accelerate their media revolution of Formula 1.

After a moment of him trying to hide his excitement, he finally got to reading the full article:

[ENGLEWOOD, Colo. & LONDON–(BUSINESS WIRE)– Liberty Media Corporation (“Liberty Media”) (Nasdaq: LSXMA, LSXMB, LSXMK, BATRA, BATRK, LMCA, LMCK) and CVC Capital Partners (“CVC”) announced today that Liberty Media has agreed to acquire Formula One, the iconic global motorsports business, from a consortium of sellers led by CVC.

Liberty Media owns interests in a broad range of media, communications, and entertainment businesses. Those interests are attributed to three tracking stock groups: the Liberty SiriusXM Group, the Liberty Braves Group, and the Liberty Media Group.

The consideration comprises cash and newly issued shares in the Liberty Media Group tracking stock (LMCK) and a debt instrument exchangeable into shares of LMCK. The transaction price represents an enterprise value for Formula One of $8.0 billion and an equity value of $4.4 billion(1).

The acquisition will be effected by Liberty Media acquiring 100% of the shares of Delta Topco, the parent company of Formula One (Delta Topco herein referred to as “Formula One”)(2). The acquisition is subject to the satisfaction of certain conditions and is described in more detail below.

Concurrent with the execution of the agreement to effect the acquisition, Liberty Media has completed the acquisition of an 18.7% minority stake in Formula One for $746 million, funded entirely in cash (which is equal to $821 million in consideration less a $75 million discount to be repaid by Liberty Media to selling stockholders upon completion of the acquisition). Prior to completion, CVC Funds will continue to be the controlling shareholder of Formula One.

After completion of the acquisition, Liberty Media will own Formula One and it will be attributed to the Liberty Media Group which will be renamed the Formula One Group. The consortium of sellers led by CVC will own approximately……..]

The article went on and on, but the crux was that Liberty Media was buying the commercial side of the sport, and with it, they announced their plans. Liberty Media planned to shift the sport from a traditional European motorsport to a global entertainment brand. Their strategy focused on modernizing the brand, leveraging digital platforms, and expanding the fan base, particularly in the United States. His company had nearly all of those things already established, which should allow them to cut their planned timeline from a few years to just one or two.

“You think they will try to buy us?” Fatih asked, finally voicing the thought that had been consuming him. He needed to know if his mother saw it as a possibility or if he was just letting his mind run away with him, crafting scenarios that were completely detached from reality.

“Yes, that’s the most likely scenario if they plan to go ahead with their plans as-is, assuming there are no additional changes due to different circumstances,” Rümeysa, a corporate lawyer with extensive experience in matters like this, confirmed. She saw it the same way he did.

Her words caused Fatih to smile. He could finally free his hands from the company that had grown more than he had ever imagined when he accidentally started it as an offshoot of his gambling business.

“What do you think their offer is going to be?” Fatih asked, wondering if the company’s actual value matched the one in his mind.

“We would need to sit down with a team of professionals for a detailed evaluation to get an accurate number,” she began. “But considering our user base, it should at least net us a minimum of 200 million dollars. And that’s the floor, considering it saves them the massive investment of starting from the ground up and gives them a company that’s already at the top. Though, depending on how we negotiate, we could increase that by up to a hundred million more. Given the money they plan to spend to fully acquire F1, this amount should be a drop in the bucket for what they’re getting in return.”

“Can we fetch an even higher price if we agree that the larger share of it is in shares from the soon-to-be-renamed Formula One Group?” Fatih asked, knowing just how valuable the sport was going to get, especially with the pandemic that was about to befall humanity in a few years.

“That is true, but are you sure you want more shares than cash?” Rümeysa asked, quite surprised that her son was already considering taking shares instead of cash.

“Money is not really a problem for us at the moment, so we’d be better off having it in something that we are confident is going to grow more in the future. At least, I believe the sport is going to grow to much higher prominence than it currently has,” Fatih said, as he remembered how much the teams and the sport itself were worth by the time the 2030s arrived. If he could have a piece of that sport ahead of time, he would be a fool not to take it for himself.

“That is true, and you have never been wrong about these predictions when it comes to F1,” Rümeysa said, nodding as she remembered that this whole business was a result of Fatih creating a gambling website, which then forced him to write breakdowns to convince users, leading to the formation of the news company that had now grown to this level. Pausing for a moment as she thought about the next step, she said, “I will go and talk with the CEO and have him make all of the preparations ahead of time. Because if we are right, they will reach out to us to discuss the purchase of the company before they even finish the full acquisition, wanting to have a verbal agreement before that happens and go through with the purchase once they fully buy the FOG.”

They continued conversing for about ten minutes before she let Fatih return to his room to continue with whatever he was about to do. She then left to have a conversation with the company CEO, not wanting to wait until tomorrow, as the matter was important enough to avoid any delay.

It seemed they were right in their assumption, as within a month of the news of the agreement to acquire F1, they were reached out to by Liberty Media to see if they were open to being acquired. This marked the start of negotiations between the two sides, and with the company’s side having already been prepared ahead of time, the negotiations happened at quite a rapid pace, showing that while they were willing to be acquired, the offer had to be satisfactory as well.