FOOTBALL: Glazer finds open books and closed doors at United

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The Independent Online
MANCHESTER UNITED last night allowed Malcolm Glazer to take a small step forward with his takeover bid, by granting him access to the club's books, but then effectively took his feet from under him by saying that they will not provide the potentially deal-breaking official recommendation the businessman requires.

As ever with Glazer's stalking of United, there will be more twists and turns before the 76-year-old American, nickname "The Leprechaun" for his looks, either takes control at Old Trafford or is finally sent packing with a flea in his pointed ear. But if his plans for ownership of the club are not quite dead in the water, they are at least flailing, in need of substantial outside assistance to stay afloat.

The problem for Glazer is that the pivotal decisions that could make or break a deal are essentially in the hands of other parties: the investment bankers, JP Morgan; and United's major shareholders, John Magnier and J P McManus, the Irish racing tycoons. On precedent, the latter, will be unimpressed with a 300p-per-share offer from Glazer and it is understood that they would have no difficulty in rejecting Glazer's offer.

JP Morgan has agreed to provide pounds 300m in funding to Glazer as part of his pounds 800m proposed buy-out, but has made it clear in the past it would not back a hostile takeover. If the United board fails to recommend any formal offer that materialises, Glazer's approach becomes hostile. If JP Morgan stays true to not backing a hostile bid, its finance will disappear and Glazer's bid is finished.

Similarly, it is understood that Magnier and McManus, who own 29 per cent of United through their Cubic Expression company, would sell their holding to Glazer if the board recommended an offer, but not otherwise.

One unknown factor that confuses matters is how JP Morgan or the Irish tycoons would react if the board refused to recommend a Glazer bid but also chose not to reject it formally. They could adopt a "third way" route, of neutrality, or "cop out" as it would likely be known among United fans. This would leave JP Morgan at least to make up its mind on a momentous - and potentially risky - decision.

JP Morgan would be backing a takeover plan that the board said yesterday was based on an "aggressive" business plan that might struggle to succeed.

The United statement issued to the Stock Exchange read in part: "The financial structure of this revised proposal of 300p has been restructured since the proposal considered by the board in October.

"The proposal involves a lower level of senior debt than the previous proposal with the equity in the bidding vehicle being supplied by Glazer and an issuance of preferred securities.

"These preferred securities would be issued by a holding company above the bidding vehicle, such securities only being secured upon the shares in that holding company.

"The board believes that the nature and return requirements of this capital structure will put pressure on the business of Manchester United, particularly if Glazer's business plan is

not met. The board continues to believe that Glazer's business plan assumptions are aggressive and that the direct and indirect financial strain on the business could be damaging."

There appeared to be a general acceptance among fans that some access to United's accounts was inevitable.

"It is good to see the board are still sticking to the line that they are unlikely to recommend any bid," Mark Longden, spokesman for the Independent Manchester United Supporters' Association, said. "We would urge the board, and David Gill in particular, to do what they know is right and refuse to recommend the offer to shareholders."

Oliver Houston, a spokesman for Shareholders United, said he was "disappointed" the club had granted the period of due diligence but was satisfied they were, in effect, also calling on the American to make his move or pull out altogether.

"This is a bold move by David Gill," Houston said. "While we are disappointed that he has granted access to Glazer for due diligence, we believe his statement confirms our suspicions that Glazer's proposals are a recipe for disaster for Manchester United. There could be not a clearer `put up or shut up' message to Glazer and it is time for JP Morgan to decide whether they will honour their commitment not to back any hostile bid.

He added: "We remain committed to safeguarding the future of Manchester United and confident we can see off this man once and for all."

James Lawton, page 70