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Ecclestone not shy, nor retiring

EM.TV announced recently that it had acquired a 50% shareholding in Bernie Ecclestone's Formula 1 empire from the financial houses Morgan Grenfell and Hellman & Friedman. The deal perplexed the financial world as it made no sense for Ecclestone to have masterminded a sale which made the two firms large profits and appeared to do nothing for him. The feeling was that Ecclestone had been caught out and had ended up with a partner he did not want. This theory seems to be backed up by events in recent days as EM.TV boss Thomas Haffa began the relationship by saying that he was negotiating to buy an extra 25% of the company in order to gain control of the commercial exploitation of the sport. He also announced a major initiative for television on the Internet, linking the coverage of Grand Prix racing with the deal.

Ecclestone has responded by saying that he is still in control - and that he intends to remain in control. "I'm going to stay where I am," Ecclestone said. "I don't ever plan to retire. I'm going to stay at this desk permanently and they'll have to carry me out in a box. We're on track for a flotation within two to three years. Eventually EM.TV may buy an extra stake but it's not on the cards for now. I'm still in control."

Ecclestone added that F1 has no plans for the Internet at the moment. "I don't know what the big fuss is about," he said. "It would probably take about 20 minutes to put Formula 1 online. When we are ready, we will go on to the Internet."

This would all seem to support the argument that Ecclestone and EM.TV are unwilling bedfellows in F1 but, at the same time, Ecclestone is reported to have orchestrated the deal with Hellman & Friedman in order to get the maximum amount of cash from the sale while also raising the value of the company.

Ecclestone had been talking to Hellman & Friedman since the summer but in the autumn he sold 50% of the F1 holding company to Morgan Grenfell for $1.3bn. The deal - which valued the F1 company at $2.6bn - was not completed and Morgan Grenfell was left with a 12.5% shareholding for which it had paid Ecclestone $325m. Before doing the deal with Hellman & Friedman Ecclestone spoke to EM.TV boss Thomas Haffa. The German did not have the cash to pay for the deal.

As a result Hellman & Friedman paid $1bn for the remaining 37.5% of the company - which meant that Ecclestone had raised $25m more than he had originally wanted in November. Hellman & Friedman and Morgan Grenfell then joined forces and sold their 50% of the business to Haffa for $712.5m in cash and $880m in EM.TV shares. This gave both finance houses large profits and raised the value of the F1 company to $3.2bn. This effectively increased Ecclestone's family's remaining 50% share in value by $300m. Bernie may also have been paid by each partner for arranging the deal.

Whatever the case, Ecclestone and Haffa are partners and Bernie has made it quite clear who is in charge. It may not be quite what Haffa had in mind.

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