Ecclestone sells F1 stake to CVC Capital, but remains CEO

LONDON: British investment firm CVC Capital Partners Ltd. has bought a controlling stake in Formula One Group, the company that conducts the Formula One car racing. The London-based investment firm also announced that it is retaining 75-year-old Bernie Ecclestone as chief executive even as he has sold his 25 per cent stake in the company to the former.

CVC Capital Partners said it has set up a new company, Alpha Prema, which will hold the 48 per cent stake of Munich-based bank Bayerische Landesbank and the 25 per cent held by Ecclestone’s family trust, Bambino Holdings, in SLEC Holdings, which owns a number of companies that run Formula One racing. The other stakeholders in SLEC Holdings are JP Morgan Chase and Company and Lehman Brothers Holdings Inc. and CVC Capital Partners are learnt to be in talks to buy them out too.

The monetary terms of the deal were not disclosed. The agreement is subject to approval by the European Commission and endorsement by the FIA, Formula One’s governing body.

CVC Capital Partners has laid out a well-chartered plan for Alpha Prema that will henceforth run Formula One. Its shareholders will be CVC Capital Partners, Bambino Holdings (Ecclestone seems to have bought back a stake in Alpha Prema on behalf of Bambino Holdings), Ecclestone and the Formula One management team.

Ecclestone remains chief executive of the operating company. Through Bambino Holdings, his individual stake and by virtue of him being the CEO, he has ensured three seats on Alpha Prema board. Chairman of SLEC Holdings Gerhard Gribkowsky, who is also director of Bayerische Landesbank, and CVC Capital Partners’ Donald McKenzie will be on the board.

Ecclestone, who has been with Formula One for more than 25 years, said in a statement that CVC’s long term strategies and vision will provide the stability for teams, promoters and manufacturers.

CVC Capital Partners, a majority Partner in Automobile Association of Britain, owns some 38 companies in Europe and operates 12 offices. It also manages the Madrid, Spain-based marketing company Dorna Sports SA, which stages the annual MotoGP motorcycle world championship.

The acquisition is seen as a move to foil a move to float a rival Formula One from 2008 by an organisation opposed to Ecclestone, called Grand Prix Manufacturers Association. It is set up by five major Formula One car makers, BMW AG, DaimlerChrysler AG, Renault SA, Toyota Motor Corp. and Honda Motor Co., all wanting to control the sports.

CVC Capital Partners said it is initiating talks with the association and the five carmakers. The association has responded to the signal saying it looked forward to constructive dialogue with CVC Capital Partners, but maintained that it is going ahead with the preparation for the new series.

Bayerische Landesbank and the two U.S. banks had inherited the stake in SLEC Holdings after Germany’s Kirch Group, which ran SLEC Holdings and had borrowed from the banks, went bankrupt. The deal will ensure that the bank got back what it had advanced to Kirch Group five years ago.