Explainer-Hole in one: How PGA Tour and LIV Golf's merger is set up

The combination of the PGA Tour and rival LIV circuit is the world's oddest merger, involving a nonprofit, Saudi Arabia's sovereign wealth fund and a deal contract that has no agreed price. Here is how it will work, according to people familiar with the details.

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.

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, which currently owns more than 90 per cent 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.

ARE THERE ANY THREATS TO THE MERGER?

Regulators and politicians may try to torpedo the deal. The U.S. Department of Justice had already been looking at the dispute between PGA Tour and LIV as part of a broad antitrust probe into professional golf.