Private Investor: Mr Glazer versus Fans United looks like a tough match

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The Independent Online

We sent Murdoch packing and gave Magnier and McManus a bloody nose. If Glazer wants a fight, we will give him one."

You have to admire the spirit of Jules Spencer, chairman of the Independent Manchester United Supporters' Association, in this reaction to the news that Malcolm Glazer is trying to buy Manchester United, very possibly with the co-operation of the club's two largest investors, JP McManus and John Magnier.

I wonder if the plucky fans will triumph. After all, it was the Competition Commission that saw off Rupert Murdoch last time, basically because of his interests in Sky TV, and no such objections can be easily raised in relation to Glazer.

Glazer owns 19.1 per cent of United, and Cubic Expression, the investment vehicle of Magnier and McManus, controls 28.9 per cent. Thus they have 48 per cent in all. Under Stock Exchange rules, Glazer would, if the deal went through, then be compelled to offer the club's remaining shareholders the same price as he offered Magnier and McManus, if they sold their shares to him. The whisper around the market is that that price will be 300p a share, compared to about 250p before the present fuss started, a potentially tempting price.

Against all that, we have Shareholders United; it runs some of the fans' stake in the club and its holding amounts to 1.9 per cent. So not much of a scrap there, you might think.

Yet taken altogether, small investors, such as me, own 18 per cent. The significance of this is not that they could ever outvote a Glazer-McManus-Magnier combine, but that they could be an irritating minority for Mr Glazer to deal with if he took the business off the stock market.

The key stake that he must get hold of is 75 per cent. Once he has that, he can make any changes he wants to. But if the 18 per cent hold firm, he will have very little margin for error, because if another 7.1 per cent escapes his clutches,he will be short of that vital 75 per cent. And, until he gets 90 per cent of the shares he cannot emulate Roman Abramovich at Chelsea and compel small shareholders to sell to him.

The chances of the holders of the 18 per cent being of much the same mind and willing and able to collude are probably surprisingly high. First, each small shareholding of a hundred shares, say, is not going to make or break the financial health of the holder. Who cares if your £250 worth of shares are now worth £300? Surely that is not enough to make you sell the soul of your beloved club?

Second, for these investors, owning a share of Man U is more an emotional than economic decision, so greed shouldn't motivate them. Third, they themselves have a say in the club. Fourth, there are plenty of websites to consult (www.ShareholdersUnited.org, for example) and the story is sufficiently important for all the developments and the views of the fans' representatives to be well covered in the national press. Small shareholders acting in informal concert is viable.

So the question is whether Mr Glazer will proceed with his bid, knowing that this defending wall of small shareholders-cum-fans may, with a little help, prevent him taking the club private. If only Mr Glazer could persuade the fans that Man U is safe in his hands. As for me, I'm sitting tight and waiting for my 300p a share offer. Then I'll think about what to do.

Back in the world of more rational investment, I have done as I intended and bought Shell, for rather more than I intended, at 422p. It's sobering to think that that is still lower than when I first bought the shares some seven years ago (457p). I bought more at sub-400p levels, which means I have averaged down the purchase price of the holding quite effectively. I hope that the outlook for the oil price and the reforms at the company now being implemented will mean that that run of seven years' bad luck is broken.

The real star in my portfolio continues to be Tesco. The shares continue to make solid, unspectacular progress and, as they say, every little helps. Every little bit of bad news about J Sainsbury certainly helps the Tesco share price. Should be 300p by Christmas.

s.o'grady@independent.co.uk

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