Formula One Deal Wins Approval

The private equity firm CVC gets a green light to takeover F1 -- but must first sell Dorna, promoter of the MotoGP series

Private equity firm CVC has been given approval by the European Commission to acquire F1's commercial holding company SLEC on the condition that CVC sells its Spanish subsidiary Dorna, the promoter of the MotoGP series. The condition is due to a Commission Competition Directorate investigation, which concluded CVC would have too much market power if it kept control of both F1 and MotoGP.

Competition Commissioner Neelie Kroes said: "When the two most popular motor sports events in the EU, Formula One and Moto GP, come in the hands of one owner, there is a risk of price increases for the TV rights to these events and a reduction in consumer choice. I am satisfied that the commitments given by CVC will eliminate this risk."

CVC said it has been given "adequate time" to conclude the sale. "We are pleased that we are now able to complete our investment in Formula One, and look forward to working with Bernie Ecclestone and his team to further develop and grow the business," said the company's Donald MacKenzie.

Details of the sale have not been disclosed but it's reported that Ecclestone, who owns 25% of SLEC, and the BayernLB bank, which is a majority shareholder of the other 75 %, along with JP Morgan and Lehman Brothers, will sell their shares to CVC. Ecclestone is expected to remain in control of the F1 operations.

The Grand Prix Manufacturers' Association (GPMA), which has threatened to leave F1 and form its own series come 2008 when the current Concorde Agreement expires, has welcomed the deal. Discussions between the GPMA and F1's concerned parties has been ongoing and a settlement is thought to be approaching.

"The GPMA manufacturers and their teams welcome and support the EU clearance of the planned acquisition of SLEC by CVC, conditional upon the divestiture of its subsidiary Dorna," the GPMA said in a statement.

"Since CVC announced its intention to acquire SLEC, significant progress in the discussions about the commercial future of Formula One has been made. Today's approval was actively supported by the GPMA manufacturers and teams and they are optimistic that it will create additional momentum for the ongoing negotiations."

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