Outlook: Glazer won't be so easy to reject this time

THE LAST time Malcolm Glazer made a bid for Manchester United, the whole thing collapsed in disarray after Mr Glazer went through with his threat to remove three directors from the board. This was understandably regarded as a declaration of war by his main financial backer, JP Morgan, which would only bankroll the bid it could be done on a friendly, agreed basis. JP Morgan promptly resigned and the bid was dead in the water.

Still, where there's a fee there's a way, and JP Morgan is now fully back on side with a new offer it hopes will be harder for the the board to reject. The last bid was turned down because it was highly leveraged. All other things being equal, the price was probably high enough to be recommended, but the financing meant taking into account the interests of other stakeholders, notably the fans. Throughout its recent history, United has had little if any debt, which arguably allows it to keep gate prices lower than is generally the case with other top Premiership teams, and leaves plenty of money for player acquisition. This happy disposition might have been jeopardised by a takeover largely financed by debt.

We know little about the new offer thus far except that it is pitched at the same level as last time and is said to have a lot less debt. Yet debt is in the end only a form of security, and if there are other instruments Mr Glazer is using which carry financial obligations, such as preference shares, directors might reasonably wonder if there is really any difference. The last bid was about pounds 500m debt financed. The latest proposals carry a minimum pounds 250m of preference share finance, which would be fully redeemed after two or three years. Not so much debt then, but still, in effect, quite a bit.

What's more, private equity takeovers only work if they can gain 100 per cent ownership of the company. Financiers won't provide the backing if there are other calls - say a small minority shareholding - on the company's assets. That's why private equity takeovers are nearly always conditional on board agreement and on the acceptance of more than 90 per cent of the equity, which allows for compulsory purchase of the rest.

Mr Glazer can probably count on the support of at least 83 per cent of the share capital, including his own near 30 per cent stake. John Magnier and JP McManus are almost certainly sellers at Mr Glazer's mooted price. There may be other loose holders that he can rely on too. The fly in the ointment, as far as the Tampa Bay sports tycoon is concerned, are the fans, who may collectively own most of the rest. Many of these "supporter" shareholders are not in it for the money, only for love of the game and the club. Quite a few of them won't accept even if the board recommends. Directors face a tough call.

Start your day with The Independent, sign up for daily news emails
Voices
voices Simon Usborne: It's not about political correctness. It's about decency
Sport
Wojciech Szczesny watches the ball cross the line as Garath McCleary scores for Reading
football All the latest from Wembley as Gunners face Reading in semi-final
Life and Style
health
News
i100
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...