DENVER - Liberty Global (NASDAQ:LBTYA) Ltd. (NASDAQ: LBTYA, LBTYB, LBTYK) has announced its upcoming acquisition of Warner Bros. Discovery (NASDAQ:WBD)'s shares in the electric car racing series Formula E. This deal, pending regulatory approval and expected to close before the end of the year, will increase Liberty Global's ownership to a 65% majority stake in the series.
Formula E, now in its 10th season, is recognized as the leading electric world motor racing championship, sanctioned by the Fédération Internationale de l'Automobile (FIA). It is also noted for its strong environmental credentials, being the only sport with a net zero carbon footprint since its inception. The championship features races in major cities across four continents, with a roster of 11 teams and 22 drivers.
The acquisition comes at a time when Formula E is experiencing significant growth in its fan base, which is nearing 400 million worldwide. The series has attracted top automotive brands such as Jaguar, Porsche (ETR:P911_p), and McLaren, and recently unveiled the Gen3 Evo car, which boasts an acceleration to 60mph in 1.82 seconds, surpassing the performance of current Formula 1 vehicles.
Liberty Global's CEO, Mike Fries, expressed enthusiasm for the expansion of the company's stake, highlighting Formula E's potential for growth and its adherence to advanced sustainability standards. Jeff Dodds, CEO of Formula E, acknowledged Warner Bros. Discovery's past support and welcomed Liberty Global's increased investment, citing it as a testament to the sport's burgeoning potential.
This strategic move is in line with Liberty Global's portfolio management and long-term investment approach, as the company continues to focus on ventures within the content, technology, and infrastructure sectors. The transaction is based on a press release statement and is subject to customary closing conditions.
In other recent news, Liberty Global has been the focus of significant strategic developments. Benchmark, an analyst firm, has revised its price target for Liberty Global shares, reducing it to $30.00 from the previously set $34.00, while continuing to recommend the stock as a Buy. This adjustment comes in response to Liberty Global's strategic efforts to enhance shareholder value and drive organic growth, including the anticipated spinoff of Swiss Sunrise, expected in the fourth quarter of 2024.
In addition to these developments, Liberty Global recently announced its Q1 2024 earnings, revealing a strong balance sheet with $3.2 billion in consolidated cash and $3.9 billion including liquid securities. The company is actively investing in fiber expansion, aiming to reach 20 million fiber-to-the-home premises by 2026.
Despite challenges in the UK market and a decline in tech valuations impacting their ventures portfolio, Liberty Global remains focused on growth and value creation. The company plans to list its Swiss operating business, Sunrise, and spin off its shares to stockholders by the end of 2024. These recent developments reflect Liberty Global's strategic moves to optimize its market presence and improve growth prospects across its European operations.
InvestingPro Insights
Liberty Global's (NASDAQ: LBTYA) recent move to increase its stake in Formula E aligns with the company's strategic focus on content and technology investments. InvestingPro data highlights several key financial metrics that potential investors may find pertinent when evaluating Liberty Global's market position following this acquisition. As of the last twelve months as of Q1 2024, Liberty Global has a market capitalization of $6.73 billion and a Price / Book ratio of just 0.37, indicating that the stock may be trading at a lower market value compared to the company's book value.
The company's gross profit margins stand at an impressive 67.15%, suggesting efficient management and a strong competitive edge in its sector. Despite these robust margins, analysts have flagged concerns, noting that Liberty Global is not expected to be profitable this year, and it has not been profitable over the last twelve months. Additionally, the company does not pay a dividend, which may influence the investment decisions of income-focused shareholders.
InvestingPro Tips further reveal that Liberty Global's management has been actively engaged in share buybacks, a sign that could be interpreted as confidence in the company's future prospects. Moreover, the stock is characterized by low price volatility, which might appeal to investors looking for stability in their portfolio.
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