Muppet owner pays £1.3bn for F1 stake
Rupert Steiner and John Waples
THE German media company that recently bought the Muppets is thought to be close to paying £1.3 billion for 50% of Bernie Ecclestone's Formula One business.
In an extraordinary twist to the Formula One saga, EMTV is buying the stake from Morgan Grenfell Private Equity, Deutsche Bank's venture capital arm, and Hellman & Friedman, an American private-equity firm, giving both companies a 100% profit.
Hellman & Friedman, which invested only last month, will have made almost £500m in four weeks.
Both companies are expected to announce this week that they have sold their stakes to EMTV, one of Europe's fastest growing media companies. Specialising in family and children's programming, it is a family controlled business run by Thomas Haffa. It is also strong in merchandising, a core earner for Formula One.
Last month Haffa spent $680m (£435m) buying The Jim Henson Company, which owns Kermit, Miss Piggy and the rest of the Muppets.
The deal gave Haffa a stake in the Odyssey Channel, an American cable network with nearly 30m customers, and the Kermit Channel, aired in Asia. It has also acquired a library of more than 450 hours of programming, including Fraggle Rock and some Sesame Street characters.
EMTV will buy the 37.5% stake owned by Hellman & Friedman, and Morgan Grenfell's 12.5%, which the bank bought last October for £234m. The deal values the entire Formula One business at £2.6 billion and places a £1.3 billion value on the half share owned by Slec, the Ecclestone family trust.
Ecclestone and his wife Slavica, whose fortune now totals £2 billion, are ranked the sixth wealthiest Britons by the Sunday Times Rich List, published today.
Ecclestone has been trying to realise value from his motor sports businesses for some time and began a process to float Formula One in an issue to be handled by Salomon Brothers two years ago. But he later abandoned it.
Some investors were concerned about the European commission's probe into Ecclestone's television contracts.
Ecclestone, 69, has since said he has altered a number of contracts with which the commission was concerned and does not expect its inquiry to be a long-term problem. He expects to be given a clean bill of health soon and still intends to float the business eventually.
Last May Robin Saunders at West LB, the German Bank, bought about 40% of an F1 bond being marketed jointly by Morgan Stanley with a price tag of $1.4 billion (£890m). It had been reduced from $2 billion to $1.4 billion and had its maturity halved to 10 years.
In October Ecclestone did the Morgan deal and the bank had an option to purchase a further 37.5%, but Morgan's Scott Lanphere failed to organise an investor group after protests at his desire to be lead investor.
Instead, as The Sunday Times revealed, the stake was bought by the San Francisco-based Hellman & Friedman group, which has also bought into Young & Rubicam, the advertising agency, and John Fairfax, the Australian media giant. Lanphere missed making a quick profit. Deutsche executives are said to have put pressure on him to justify his Formula One investments and this caused the sale. He has become increasingly desperate over recent weeks, making frequent trips to Germany and "rattling cages" to get the stake sold.
Morgan also owns a stake in the troubled Arrows Formula One team, which Lanphere has also been trying in vain to sell.
Ecclestone said of Morgan Grenfell: "They thought they could play hardball and they couldn't.
"They missed the deadline on the option and I wasn't prepared to extend it. They are not as hard as they think." |