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F1 stake sale ends unhappy bond
Michael Able and John O'Donnell | November 26, 2005 20:05 IST
Formula One's biggest shareholder, German bank BayernLB, sold its stake in the business to CVC Capital Partners, ending a feud with co-owner Bernie Ecclestone over the world's top motor-racing series.
Ecclestone will also sell his 25 percent share to CVC. That will give the private equity house, which also owns the rights to the motorcycling world championship, control of Formula One, the three parties to the sale said in a statement on Friday.
The 75-year-old billionaire will then, however, buy a stake in a venture that CVC is forming to control Formula One. A source familiar with the situation said Ecclestone's family and management would end up with about 18 percent of Formula One.
Ecclestone, who made a fortune by exploiting Formula One's commercial rights, also said he would remain chief executive of the business.
CVC is also in talks to buy the remaining shares in the company, which are owned by Lehman Brothers and JP Morgan, a source said earlier on Friday.
For BayernLB, the sale of nearly half the company's stock marks the end of a tussle for control with Ecclestone, a former used-car salesman who transformed Formula One into a multi-billion-euro business.
The Bavarian lender collected the shares in Formula One three years ago as security on a unpaid loan after the collapse of Germany's Kirch media empire. But its marriage with Ecclestone was an unhappy one.
It started a court action to get a bigger say in the management of Formula One, where the banks, despite owning almost 75 percent of the business, were classed as minority shareholders.
The sale comes amid uncertainty over Formula One's future.
Five major carmakers have threatened to launch their own series of auto races in 2008 unless significant changes are made to the way Formula One is run.
The Grand Prix Manufacturers Association wants more transparency and a bigger slice of the sport's commercial earnings.
Ecclestone, the son of a trawler captain who left school at 16 to become one of Britain's wealthiest businessmen, is seen as the sport's modern day architect.
He transformed it commercially by establishing a business to manage Formula One coverage and promotion rights, which saw its profits grow as the sport became more popular around the globe.
(Additional reporting by Alan Baldwin in London)
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