Manchester United ended months of speculation yesterday by announcing that it had received a takeover approach from the American sports billionaire Malcolm Glazer, who is likely to have to pay £800m to get his hands on the world's biggest football club.
The club was forced into making the announcement by the takeover panel after fresh press speculation over the weekend, even though Mr Glazer, the 76-year-old owner of the Tampa Bay Buccaneers American football team, has not indicated a price he is willing to pay.
In a Stock Exchange statement, United said that the approach was "preliminary" and contained a number of significant conditions. The club added it was seeking clarification of Mr Glazer's proposal, saying that "at this stage it is unclear whether any offer will be made".
The conditions attached to the offer are thought to include Mr Glazer's ability to finance a bid and obtain the backing of the club's biggest shareholder, Cubic Expression, for an offer. Cubic, which is controlled by the Irish horseracing duo of JP McManus and John Magnier owns a stake of just under 29 per cent. It is not thought to have been contacted by Mr Glazer before he made his move on United.
The approach is understood to have come from Mr Glazer's investment banking adviser JP Morgan. It was made to the board in the past fortnight.
United had not intended to make any formal announcement about the approach until the intervention of the panel, hence the heavily qualified statement that emerged yesterday morning. Mr Glazer was not available for comment, although he is thought to be about to appoint the financial public relations firm Brunswick to act as his spokesman.
United shares closed 5 per cent higher last night at 271p, valuing the club at £710m. However, sources close to the situation said Mr Glazer would probably have to bid more than 300p to gain the support of Cubic. "I guess if someone came up with enough money, the Irish would be interested but the figure would have to have a three in front of it," the source added.
To declare any bid unconditional, Mr Glazer would have to have Cubic's 29 per cent stake in the bag. Cubic refused to comment beyond reiterating that it was a long-term value investor in Manchester United. If Mr Magnier and Mr McManus did sell out for more than 300p, they would make about £70m on their investment.
Any bid from Mr Glazer would almost certainly be heavily debt-funded and might also invove him having to sell off all or part of Tampa Bay Buccaneers. However, he would have no competition hurdles to overcome, unlike Rupert Murdoch's BSkyB, which was blocked from buying Manchester United in 1999 by the Government.
Although Manchester United is the wealthiest club in the world by revenues, it is outgunned on the transfer front by Chelsea.
The club also warned recently that it had run out of cash to buy any more players after the £25m purchase of Wayne Rooney and would take a £14m hit to profits this year, due to lower television revenues and a decline in receipts from European football.
United fans are likely to oppose any sale to Mr Glazer, as they did five years ago when BSkyB was thwarted. A banner displayed outside the club's Old Trafford stadium before last Sunday's home draw with Middlesbrough read "Not4Sale".
WORLD'S BIGGEST CLUB MAY COST AMERICAN FOOTBALL SUPREMO £800M
With a $1bn fortune, and ranking 278th on Forbes magazine's US rich list, Malcolm Glazer is best known as the owner of the Tampa Bay Buccaneers, the winners of the Superbowl in 2003. The Palm Beach-based tycoon's empire was, however, built up upon his family's watch parts business in Rochester, New York.
Mr Glazer had already been working in the family's shop for seven years when he inherited the business, aged just 15, in 1943. Over the next 50 years he built up a diverse portfolio spanning the US, which included shopping malls, broadcasting, food packaging, mobile home parts and government bonds.
His holding company, Zapata, was set up by the former US president, George Bush, as an oil pumping firm. Under Mr Glazer's control it was transformed into a profitable conglomerate, known particularly for fish oil.
The company, now run by one of his six children, Avram, also hit the headlines in the late 1990s with an attempt to buy the internet group Excite.
In 1995, he bought the Tampa Bay Buccaneers for $192m and the American football team went on to win the Superbowl for the first time in 2003. The club was recently valued at $779m.
His attempt to buy the LA Dodgers baseball team was blocked because of his interest in the Buccaneers.Reuse content