Sutil gets the nod
The Silverstone enclave is sending up white smoke. A decision has been agreed upon and Jules Bianchi will be disappointed as Adrian Sutil gets the nod from Vijay Mallya.
Apparently tickets were booked for both drivers to attend the Melbourne event however Force India have as yet to confirm anything.
Announcements over Force India’s 2014 supplier may tell us more and the time between now and when that is made will tell us whether this was a Sutil/Mercedes or Ferrari/Bianchi decision – or in fact more is yet to be revealed.
UPDATE: Possible reasons for Sutil’s selection
The debate for weeks has been over whether Force India will select Sutil or Bianchi. Sutil represents Mercedes and Bianchi is a Ferrari academy driver. So, with decisions yet to be finalised on which 2014 engine supplier they wish to use, the speculation has been over which way Force India will go. Sutil/Mercedes engine or Bianchi/Ferrari engine.
About a week before the launch Bob Fearnley told us they were still evaluating drivers but this defence was dropped pretty quickly when the ‘dithery’ and ‘indecisive’ comments began to flow.
What is laughable is the various media outlets who are analysing why Sutil is a better driver and therefore a more conservative choice than Bianchi – hence the decision. TJ13 will explore matters a in a less superficial manner.
It appears as though the Indian Authorities are doggedly pursuing confrontation with Mallya and his friend Subrata Roy which Vijay himself suggests is born out of jealousy. The forces aligned against him including a consortium of 17 Indian banks are not insignificant and even within the Indian judiciary there are those strongly opposed to anything other than the letter of the law and more being applied to Mallya’s questionable business practices.
F1 is not the place to be if you are being maligned and incurring public character assassination. The constant stream of bad publicity Vijay is receiving must at times feel akin to a slow Chinese water torture.
Mallya will not end up with just the shirt on his back – trudging the streets of Mumbai, but he may well find his capital wealth, much of which is leveraged, slashed substantially. This may provoke a re-consideration of Vijay’s spending priorities and a Formula 1 team may not now appear so attractive
Whatever Bob Fearnley say’s the team does not have any big paying sponsors other than the Kingfisher companies, Rob Roy and Vijay himself. Then there is the issue of how Diageo would feel about continuing the Force India sponsorship of Vladimar, Whyte and MacKay… should they gain control of the United Spirits business.
If the team were short of cash until a new ‘investor’ is engaged, then Sutil is believed to have a bigger immediate cash backing – the promise of engines the diminishes in importance.
I am certain from what was said to me by a wise old F1 fox – on the weekend of the Autosport exhibition – that there ‘Force India for sale story’ has legs. This may be in the form of a partial ‘new investment’ with options to acquire the rest at a later date.
As pointed out by some TJ13 readers, the choice of Sutil and Mercedes sends out the message that the status quo has been maintained. Should Bianchi have been given the Force India seat, the suggestion may have sent to ‘interested parties’ that new long term deals have been done with Ferrari that may not be easily reversed.
Of course it could simply be a deal with Mercedes has been done for 2014 engines and it was preferable to the one offered by Ferrari. What is for certain is that Kingfisher Airlines is defunct, United Spirits will be probably be sold leaving Vijay with his United Breweries business and a much smaller corporate profile and wealth.
Problems for Mallya with Diageo Deal
Bob the Builder (of cars) in his most recent defence of the finances of Force India’s overlord a few weeks back, claimed that all was well for Vijay since he had managed to up the share price of the United Spirits business by a 3-4 times multiple. Whilst nominally true, the price has risen slowly since a 12 month low in March 2012 of 502. As rumours of Diageo’s interest in taking over the business grew the share price climbed steadily.
Diageo around 3 months ago offered to ‘make a formal offer’ to public shareholders – when the various Indian Authorities agree the sale – to acquire their shares at a price of 1140.
The speculation surrounding this deal has ramped up the price to a high at the end of January of 1952 when Sebi (Indian Securities Board) gave a preliminary green light to the Diageo to make a ‘formal offer’. Since then the share price has fallen 7.5% and continues to decline. Contrary to what has been written elsewhere, my information is that the Indian Competition Authorities have concerns over the takeover and the Economic Times states their findings will be made public in March.
I think I commented in response to Bob Fearnley’s confident assertions that if I was a United Spirit’s shareholder I would cash in my chips and run for the hills. Clearly, if Diageo only wish to pay 1140 per share, the price at present is inflated due to speculative forces in the market.
Should there be problems with the remaining regulatory approval required or punitive conditions imposed on Diageo, they could withdraw from the offer completely. The price of United Spirit’s shares would most likely fall of a cliff and return to somewhere near the value they were before the Diageo rumours of a takeover began.
At that price, the banks would then own charges on about 1/4 of the business which they are indicating they will collect along with another $1,2bn of assets they will claim.