Aabar, Daimler to Buy Majority Stake in Brawn GP

[PatrickShim]

http://online.wsj.com/article/SB1000...325559224.html

NOVEMBER 16, 2009, 11:19 A.M. ET.
Aabar, Daimler to Buy Majority Stake in Brawn GP
By NOUR MALAS And OLIVER KLAUS

DUBAI--Aabar Investments PJSC, the largest shareholder in Daimler AG, Monday said it would acquire jointly with the German car maker a majority shareholding in the Brawn GP Formula One team, at a time when the F1 racing series is struggling with the fallout from the world economic crisis.

Gero Breloer/Associated Press Daimler's Dieter Zetsche talks to Ross Brawn, team principal of Brawn GP at the Abu Dhabi Formula One Grand Prix in early November.

Under the deal, Aabar and Daimler will jointly buy 75.1% of Brawn GP, the winner of this year's Formula One constructors' and drivers' championships, with the existing owner, Ross Brawn, to hold the remainder, the Abu Dhabi investment firm said in an emailed statement.

Aabar, which is majority-owned by Abu Dhabi state fund International Petroleum Investment Co., or IPIC, will hold a 30% stake in Brawn GP, while Daimler will hold 45.1%, the company said. The deal is still subject to regulatory approvals in Switzerland and the European Union.

The new Mercedes racing team "will compete in the 2010 Formula One World Championship under the continuing leadership of Team Principal Ross Brawn" as Silver Arrow team, Aabar said.

The deal, which follows the inaugural Grand Prix in Abu Dhabi in early November, comes at a critical time for Formula One. The racing series has been affected by a slowing global economy and tight funding, leading sponsors to withdraw and teams to quit.

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The Fédération Internationale de l'Automobile, F1's top governing body, last year agreed to cut the budgets of Formula-One teams by at least 30% to safeguard the future of the FIA Formula One World Championship. Measures introduced to meet the target included reducing engine costs, in-season testing and staff numbers. Formula One teams also agreed to use lower-cost, longer-lasting engines from 2009.

Despite the cost cutting efforts, Toyota Motor Corp. said earlier this month it would withdraw from participating in Formula-One racing events after this year due to the changed economic environment, which has left the auto giant struggling with losses after the collapse of car sales in the U.S. and other major markets.

In July, BMW AG pulled out of the series citing falling sales, poor racing results and its quest for a greener image. Last year, Honda Motor Co. exited F1 amid cost-cutting efforts due to falling sales of its cars.

Aabar's move makes it the third, high-profile Arab investor in Formula One. Abu Dhabi investment firm Mubadala Development Co. owns a 5% stake in Ferrari, while Bahrain Mumtalakat Holding Co., which is wholly owned by the government of Bahrain, holds a 30% stake in McLaren Group, which is also 40%-owned by Daimler.

A spokesman for McLaren wasn't immediately available for comment on what Daimler's involvement with Brawn will mean for the team.

Flush with cash from years of soaring oil prices, sovereign-linked U.A.E. investors such as Aabar, IPIC and Abu Dhabi National Energy Co., or Taqa, are targeting foreign assets to extend their influence outside the Middle East and to seek the transfer of know-how and technology.

Aabar, which also has its shares listed on the Abu Dhabi stock market, invests in non-energy assets on behalf of its majority owner IPIC as part of the Abu Dhabi government's strategy to diversify its economy away from oil and broaden its industrial base.

Aabar has accelerated its investment drive this year, buying stakes in a wide range of assets in the real-estate, infrastructure and automotive sectors. Aabar bought a 9.1% stake in Daimler in March and said it would pursue joint projects with the Stuttgart-based company. In July, it bought a 40% share in Tesla Motors Inc. from Daimler, giving it a near 10% stake in the San Carlos, California-based electric car start-up.

[JimK]

and it looks like it will be the dueling Nicks next year at Brawn: Heidfeld and Rosberg...