German media reveals F1 shares weren't undervalued


The case against jailed German banker Gerhard Gribkowsky rumbles on. Last month Gribkowsky was arrested on suspicion of receiving a $50m bribe for allegedly undervaluing shares in SLEC, F1's commercial rightsholder, when they were sold to the sport's current majority owner CVC in 2006.

Gribkowsky was SLEC's chairman and he represented German bank BayernLB which owned a 47.2% stake in the company. As Bayern's representative Gribkowsky had a duty to get the best deal for the bank. The German prosecutors claim he did not do that and added that "the stake had been sold without being properly evaluated." For weeks Pitpass' business editor Chris Sylt has been saying that this is nonsense and, at last, other renowned outlets are catching on.

According to the German press today, an article in weekly magazine Der Spiegel reports that other potential buyers of Bayern's shares offered much less than CVC. In any auction the market value of a product is determined by what buyers are prepared to pay. So if the other potential buyers, such as Hong Kong conglomerate Hutchison Whampoa and private equity firm Clearbrook Capital, were not prepared to pay Bayern as much as CVC then it is extremely hard to say that the sale undervalued Bayern's shares.

As an indication, the reports state that Hutchison offered $1bn for SLEC with Clearbrook offering $1.5bn. In contrast, as Pitpass has shown with absolute certainty, CVC paid $1.7bn so this in itself speaks volumes. Indeed, even if an accountant were to come forward with a valuation of Bayern's shares from 2006 showing that they were worth more than it received from CVC, this would be irrelevant if no one was prepared to pay it.

Spiegel has a circulation of over one million and reportedly employs 80 fact checkers so it is a very credible source. But it doesn't stop there. The German newspaper Frankfurter Allgemeine Zeitung reports that sources in Bayern say its F1 stake was sold "clearly above its book value." If both this and the Spiegel report are true there is pretty much no way that Bayern's SLEC shares could have been undervalued.

These conclusions tally perfectly with Pitpass' report that the stake isn't likely to have been undervalued since Bayern received a valuation yield of €328m in 2006 and its results stated that the sale of the F1 shares "decisively contributed to the positive result." It also tallies with Pitpass' report that Bayern got a better rate for its stake than at least one of the other banks which sold SLEC shares to CVC so it clearly cannot have been undervalued.

It puts an interesting light on last week's revelation that CVC has instigated an investigation into the circumstances surrounding the acquisition of the SLEC shares. As Pitpass has pointed out, given that F1 is a client of the two firms handling the investigation it was clearly not demanded by an external party. On this basis alone it may be unlikely that the firms will reach a different conclusion than the one which CVC and F1 itself has already reached - that the $50m was not paid for the shares to be undervalued. If that happens then F1 will most certainly not face the "turmoil" which Sky News speculated could ensue from the investigation.

Likewise, outlets which have suggested Ecclestone paid the money for undervaluing the shares could be left scrambling if the news from Spiegel and Frankfurter Allgemeine Zeitung is proven to be true in court when Gribkowsky goes to trial. This outcome, combined with the investigation proving that no money was paid for undervaluing the shares, could be devastating for some media outlets.

They could be faced with having to prove why they dragged Ecclestone into their reports at all since, more than anything, there would be no evidence that the scandal should have turned the spotlight on him. Indeed, as one newspaper recently reminded its readers, Ecclestone has said "if the German newspapers write that I had something to do with the payments, which is absolute nonsense, I will take them to court."

Article from Pitpass (

Published: 21/02/2011
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