EU clears acquisition of Formula One racing

/ Source: The Associated Press

European Union antitrust regulators cleared the acquisition of the Formula One Group racing series by CVC Capital Partners Ltd. on Tuesday, provided the British investment group divests its Spanish subsidiary Dorna.

Overall, the deal "would not significantly impede effective competition" in the European Economic Area, which includes the 25-nation EU, Switzerland and Norway, the European Commission said.

But EU Competition Commissioner Neelie Kroes said CVC had to sell Dorna, which promotes the Moto GP Motorcycle Championships, because of "a risk of price increases for the TV rights to these events and a reduction in consumer choice," if CVC controlled both.

EU regulators said their investigation showed that the acquisition of Formula One alongside the Moto GP championship series and the FIM Supercross World Championship, which CVC already controls, would pose problems in the Italian and Spanish television markets, where both car and motocross racing are very popular.

CVC announced its intention to buy a majority stake in the F-1 racing series in November, saying it planned to keep Bernie Ecclestone, the longtime commercial head of Formula One, as chief executive. The price of the deal has not been disclosed and the acquisition is not expected to change the way Formula One operates on the track.

The London-based buyout group has formed a new entity, Alpha Prema, which will acquire the 48 percent stake in Formula One held by Munich-based Bayerische Landesbank and the 25 percent stake held by the Ecclestone family trust company, Bambino Holdings.

The deal will give Alpha Prema 73 percent of Formula One and majority control, with the remaining stakes held by JP Morgan and Lehman Brothers.

Under the terms of the deal, Alpha Prema will have as its shareholders CVC, Bambino, Ecclestone and the Formula One management team.

CVC owns 38 companies in Europe and operates 12 offices, including the Madrid, Spain-based marketing company Dorna Sports SA. The company is also the majority shareholder of the Automobile Association in Britain.