Outlook: Glazer won't be so easy to reject this time
Tuesday 08 February 2005
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.
- 1 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 2 US? China? India? The 10 biggest economies in 2030 will be...
- 3 'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
- 4 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
- 5 Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
General Election 2015: David Cameron catching up in polls – but he badly needs a clear lead
South Africa xenophobic attacks: Shops looted and violence on streets of Johannesburg as foreigners are forced to hide in police stations
18th century sex toy found in 'toilet of sword fighting school' in Poland
'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...