26/04/2012
NEWS STORY
Over the past 24 hours some websites have been reporting that Nestlé chairman Peter Brabeck-Letmathe will become chairman of F1's parent company if it is listed in Singapore. What these reports forget to mention is the small matter that the board of the F1 Group has not yet voted to approve the flotation as Pitpass' business editor Christian Sylt revealed last week.
The story about Brabeck first appeared on the blog of Sky News' business editor Mark Kleinman. He is renowned in media circles for unwarranted use of the word 'exclusive' to describe his own stories, a point which has even been raised in national newspapers.
Kleinman has been covering F1 intermittently for just over a year and, as Pitpass has pointed out, his blog posts have contained some striking errors and his exclusives have had a tendency not to come to pass.
Perhaps the best example of this is on the very subject of F1's chairman. In March last year Kleinman wrote a post titled 'Exclusive: Rose Sounded Out Over F1 Role' which said that Sir Stuart Rose, the former boss of Marks & Spencer, could become F1's chairman. Kleinman wrote, "CVC Capital Partners, the private equity firm which controls F1, approached Sir Stuart some weeks ago about becoming non-executive chairman of Delta Topco, the sport's holding company."
Now Kleinman tells us that in fact, Brabeck will be the chairman which makes you wonder if there will be more 'exclusive' revelations about who is in line for the job. Surely it would be better to wait until discussions are more than just an approach before writing about it?
The piece about Brabeck comes just one day after Kleinman produced a post titled 'Exclusive: Banks Join F1 Float Starting Grid'. The 'exclusive' this time was that "CVC Capital Partners, which has owned F1 since 2005, has in recent days added Morgan Stanley, the Wall Street bank, to jointly lead the listing in Singapore alongside Goldman Sachs and UBS. CIMB, the Malaysian bank, DBS, the Singaporean lender, and Santander, the Spanish bank which lends its name to a series of high-profile F1 sponsorship deals, have been handed more junior roles by CVC, I'm told."
This all sounded familiar to Sylt as it seemed that the reports about the banks had been out before Kleinman's report which was posted at 2.41pm. A quick check online revealed that Reuters posted a piece at 11.30am the same day about a report in its publication International Financing Review saying that "Morgan Stanley, Spain's Banco Santander, Singapore's DBS Group and Malaysia's CIMB have been added as bookrunners for Formula One's upcoming Singapore initial public offering." It seems that Kleinman's news was not so exclusive after all which led Sylt to post a comment below it asking "How can this story be exclusive when the identical news appeared in International Financing Review four hours earlier? "
Although Brabeck is the second person (after Rose) that Kleinman has linked to the role of F1's chairman, there is no doubt that no one had made this link previously. This means that if the float actually happens, and Brabeck does become chairman, then it will indeed be exclusive news. It isn't earth-shattering, though this is no fault of Kleinman's, since Brabeck is already an independent non-executive director on the board of F1. If the role of chairman was indeed to go to an outsider like Rose it would be much more interesting but as it stands, it is a bit like saying that a new holding company will be set up for the float - it is a bit obvious and unexciting but it is news nonetheless.
Sylt understands that F1's boss Bernie Ecclestone made the initial approach to Brabeck about becoming chairman and he certainly has huge respect for the Nestlé boss. Hiring Brabeck also comes across as a snub to F1's other independent non-executive director Martin Sorrell who has been one of Ecclestone's most vocal critics and spoke out against the F1 boss over his controversial comments about Hitler and the life-ban originally handed to former Renault F1 team boss Flavio Briatore. In contrast, it is understood that Brabeck has never spoken publicly about his F1 directorship.
It remains to be seen whether a chairman will be appointed since this seems to depend on the float proceeding. As Sylt has revealed, the F1 board will decide on it next month but a high level source has since suggested to him that it may be "too late to stop it."
On Tuesday CVC gave a presentation about how F1 operates to a group of analysts and, according to one of them, the managing director of CVC UK referred to data from F1's industry monitor Formula Money (which Sylt is involved with) and explained the growth opportunities for the sport. The analysts are using the information to produce briefing notes on F1 and some of them are working to deadlines of around five days despite the float not yet having a green light.
What is in no doubt is the $10bn amount which F1 will be valued at if it floats. Close followers of Pitpass may remember that back in March we predicted that there would soon be "one of the most important changes to the commercial landscape of Formula One in its history." This was subsequently revealed to be the float but even before that, when Sylt revealed that F1's second-biggest shareholder, Lehman Brothers, needs to sell its shares by 2014, we pointed out that F1 is worth $10bn. Some ill-informed commentators questioned this with one saying lovely though it might be for the finance people to think that the sport can be valued at $10 billion, it is worth a fraction of that at the moment. Now, everyone agrees that F1 will have this valuation if it floats so the only question remaining is the $10bn one: will it happen?