Liberty Media has announced that the investment opportunity offered to Formula 1 teams to purchase up to approximately 19 million shares of Formula One common stock (known as FWONK shares) has expired. The Formula 1 teams were offered the opportunity to invest at a per share purchase price of $21.26 at the time of Liberty’s acquisition of Delta Topco Limited, the parent company of Formula 1, on January 23, 2017. This offer was subject to a six month investment review process.
“We have been actively engaged with all teams to shape a shared vision for the sport that will create real value for all stakeholders,” says Chase Carey, the Formula One chairman, “While the window for this particular investment opportunity has passed, we are pleased with the collaborative discussions we are having with the teams. These discussions will take time, but we appreciate their receptivity towards further aligning our incentives for the long-term benefit of the sport.”
FWONK stock is currently trading at $34.23. There are currently around 230.6 million shares outstanding.
joeblogsf1 
does that mean no team took up the offer or that more details on any purchases will be forthcoming. seemed like a pretty generous discount to the current price
So did any teams buy shares?
The obvious question is, did any of the teams buy some of those shares; and if so, which team or teams?
Chase Carey, the Formula One chairman: “While the window for this particular investment opportunity has passed, we are pleased with the collaborative discussions we are having with the teams. These discussions will take time, but we appreciate their receptivity towards further aligning our incentives for the long-term benefit of the sport.”
Vacancy, Liberty Media: English translator for CEO.
Well initially they look to have been worthwhile from a purely capital gain point of view at a 61% gain! (this is on the quoted “Mid prices”) However the spread is a bit large at 22.2% : $30.81/$37.65 (current price as /I write)
So when you look at the likely Bid/Offer prices at both ends of a deal the buy price was likely $23.62 and the current sell price is $30.83 so the 61% actually shrinks to 30%. Still not bad and the brokers/market makers will love the huge spread. (not mentioning broker deal fees or platform fees on each end nor of course any taxes)
In fact after a quick look one would have done rather better with Ferrari shares over the same period. (NYSE:RACE) These show approx a 45% increase with a minimal spread of 0.3% ish.
The purchase offer would likely have a lock-in period, restricting the teams from “flipping” the shares immediately after purchasing them.
Re other matters, if his next test after Hungary is successful, anybody willing to give odds against RK replacing JP at Renault?
JP has less luck than Johnny Herbert used to, but like Napoleon (it being a French team) the Reggié may pick RK for his luck. (He has to be damn lucky as firstly he is alive and secondly apparently back in one working piece)
An absurd offer from the start. The teams already “own” a 50% economic interest in the sport – at the revenue line no less – with no capital investment other than into their own operations. Why would a team owner want to invest additional capital in FOM (FWONK) to purchase an additional few points of equity whose value only accretes only after all of FOM’s operating expenses are covered? It makes no sense at all from a team’s perspective. Their interests are already highly aligned in that both their revenue streams are dependent on the health of F1.
Hi Joe,
Why would the teams want to buy shares in Delta Topco Limited if the sport is going down the franchise route? Would that not mean that as franchisees they would have a conflict of interest also being share holders in the franchising company?
Wouldn’t that make them both gamekeeper and poacher at the same time, I’m also not sure that would be allowed under US law re conflict of interest.
That is not what the story says
So do we know which teams exercised the option and for how many shares?
Ron never left…
You’d have to be a right FWONKer to pass up on that discounted opportunity!
Did they extend the offer to jet-lagged journalists who are wondering how they can afford to fly to 25 races in a year?
Why should they pay for something that they think that they should own
Do you know which (if any) teams did invest? Feel like a no brainier to (naive) me.
None
Having to BUY something they create. And having to keep it long term (I think it was 5-10 years) before selling, might not be in the teams view all that great of a deal Crowman
Joe,
Any idea of the take up of the 19 million shares?
So did anyone buy?
Why do you think the teams decided not to invest? It was obviously a good financial investment given where the current stock price is.
If, as has been suggested, the shares came with a long-term lock-in clause, the teams would not be speculating on short-term gains but, instead, blind betting on the health of the sport then – after the current Concorde agreement ends, after the current engine formula ends, and so on.
Why would teams put money there rather than, say, investing in winning?
The health of their businesses are already strongly aligned to the health of Formula One. If the sport declines for whatever reason, the last thing they will need is an illiquid and falling investment
Another downside to this deal is that the shares (FWONK) are non-voting shares. They would be, strictly speaking, an investment opportunity. Given the teams are already “owners” in the results (through the payouts) it really did make little sense.
In reality, all the share types (FWONA, FWONB and FWONK) are tracking shares. This means they are not true ownership shares but shares that rise and fall in value with the performance of Liberty Media’s F-1 segment. This is the case for all the Liberty Media shares.