Explaining the PGA Tour and LIV Golf’s merger

The combination of the PGA Tour and rival LIV circuit is an intriguing merger, putting an end to a long-term rivalry between Saudi Arabia’s LIV and the nonprofit PGA Tour.

WHAT IS THE DEAL PRICE?

The two golf tournament organizers agreed to the merger without pinning down financial terms, in a bid to end a long-running legal dispute. LIV had filed an antitrust lawsuit in the United States seeking punitive damages against the PGA Tour for its “tortious interference” with contracts with golfers. PGA Tour had countersued, making similar claims.

PGA Tour and LIV have now signed a framework agreement that calls for investment banks M Klein & Co. and Allen & Co. to carry out a valuation analysis of the assets of LIV and PGA Tour, respectively. It is not clear how the two sides would proceed if disagreements arise over the valuations.

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WHO WILL OWN THE COMBINED COMPANY?

A new company will be created that will be majority-owned by the existing PGA Tour, which is a nonprofit. The new company, however, will operate for profit and Saudi Arabia's Public Investment Fund (PIF), which currently owns more than 90% of LIV, will take a large minority stake in the combined entity. The exact stake that PIF will assume in the new company will depend on how much it will invest — an amount expected to be in the billions of dollars. PGA Tour and PIF will negotiate how much money the new company should start off with.

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