The proposed acquisition between Liberty Media and Dorna Sports appears to be a strategic and complementary move. Liberty Media, known for its ownership of Formula One (NASDAQ:FWONA) (NASDAQ:FWONK), is set to acquire Dorna Sports, the entity behind MotoGP, at a significant valuation of nearly $4.53 billion.
This acquisition is poised to create synergies between two major players in the motorsports industry, potentially leading to cross-promotional opportunities and the pooling of resources for mutual benefit. MotoGP’s global fan base and reach, combined with Liberty Media’s expertise and experience in the world of Formula One, could pave the way for exciting developments and collaborations within the racing world.
Strategic MotoGP Acquisition
MotoGP, the leading global motorcycle racing championship, has captured an immense fan base with its races. With Dorna holding exclusive commercial rights, Liberty Media’s strategic acquisition represents a key expansion in its sports portfolio.
This move, acquiring Dorna from Bridgepoint and the Canada Pension Plan Investment Board, solidifies Liberty’s presence in the motorsports domain but also opens up new avenues for collaboration and innovation within the dynamic world of motorcycle racing. By uniting the expertise and resources of both entities, this acquisition may elevate the overall fan experience across diverse global markets.
An Attractive Business Profile
MotoGP boasts high margins, well-diversified contracted revenue streams, and attractive free cash flow generation. Under the deal, Liberty will acquire 86% of MotoGP at an enterprise valuation of nearly $4.53 billion, while the current MotoGP management will retain a 14% stake in the championship.
After leading Dorna for almost three decades, Carmelo Ezpeleta, the CEO, will continue to spearhead the company post-transaction closure. The deal is anticipated to close by the end of this year.
Is Formula One Stock a Good Buy?
Following the deal announcement, Formula One shares are ticking marginally higher today. Overall, the Street has a Moderate Buy consensus rating on the stock alongside an average FWONK price target of $84.67. This points to a substantial 29.1% potential upside in the stock.
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