Formula One owner Liberty Media (FWONK) announced Monday that it has entered into an agreement to acquire MotoGP's parent company Dorna Sports.
Liberty Media will acquire 86% of MotoGP, with MotoGP management retaining approximately 14% of its equity in the business. The transaction reflects an enterprise value for MotoGP of €4.2 billion and an equity value of €3.5 billion. The existing debt balance at MotoGP is expected to remain in place after closing.
Furthermore, the equity consideration to sellers is expected to be comprised of approximately 65% cash, 21% in shares of Series C Liberty Formula One common stock and 14% of retained MotoGP management equity, with the cash consideration funded with a mix of cash and debt.
The deal is expected to be completed by the end of 2024.
"This is the perfect next step in the evolution of MotoGP, and we are excited for what this milestone brings to Dorna, the MotoGP paddock and racing fans," said Carmelo Ezpeleta, CEO of Dorna.
Greg Maffei, Liberty Media President and CEO, stated: "Carmelo and his management team have built a great sporting spectacle that we can expand to a wider global audience. The business has significant upside, and we intend to grow the sport for MotoGP fans, teams, commercial partners, and our shareholders."
Reacting to the news, analysts at Citi maintained a Buy rating and $77 price target on FWONK, stating that they estimate MotoGP would need to generate $255 million of EBITDA to match F1's current EV-EBITDA multiple.
"We suspect MotoGP’s will likely generate $190 million of EBITDA in 2024. If management can find ~$60 million of synergies, F1’s equity is likely to see no pressure today. However, every $20 million shortfall in EBITDA is apt to pressure F1’s equity by ~$1.45 per share," the analysts at Citi explained.