How chase for better deal left 'uneasy' Reds walking through takeover storm

Certain shareholders' ambitions and mutual suspicions lie behind failure of DIC bid to buy Liverpool. Nick Harris reports

In the space of little more than two weeks, Liverpool's chief executive, Rick Parry, has gone from being a staunch advocate of the most attractive takeover bid that an English football club has ever been offered to a defensive figure who claims that Dubai International Capital tried to "bully" Liverpool into accepting £450m, underwritten by a multibillionaire.

For many Liverpool fans DIC's proposed buyout, backed by Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, offered a chancefor the club to become genuine contenders against Roman Abramovich's Chelsea, the Glazers' Manchester United, Arsenal in their new 60,000-capacity stadium and Europe's giants. How on earth, they must be wondering, did Liverpool let that one slip away?

The answer is complex. A mixture of desire by some shareholders - and not primarily Liverpool's 51.6 per cent stakeholding chairman, David Moores - to pocket more money; a feeling of slight unease, arguably misplaced, that DIC's offer was not what it first seemed; the persuasive powers of the American businessman, George Gillett Jnr, whose renewed bid, coupled with Liverpool's willingness to listen to it, led DIC to walk away in disgust; and a measure of good old-fashioned cock-up.

Indeed, had Liverpool been more open when Gillett came back to the table, and tried to persuade DIC that it was very much still in the mix, DIC might still be around. Instead, Sheikh Mohammed felt affronted that Liverpool should try to double-deal, and ordered DIC to pull out. "He felt the whole thing was damaging to DIC and Dubai's reputation and was not going to be messed around," a source said.

The Liverpool camp argue that, once Gillett returned with a new offer, they were compelled to listen for the sake of shareholders, who will profit directly by making more money from Gillett's £5,000 per share offer than DIC's £4,500. When Liverpool belatedly told DIC this, DIC's response, Parry said yesterday, "was to give the club 12 hours to make a decision, but the chairman was not prepared to have Liverpool Football Club bullied".

It is understandable that DIC should be annoyed. It was anticipating a formal joint announcement on Monday, and had grounds for such confidence. When Parry was asked on 14 January whether he believed the DIC deal was a "100 per cent", he replied: "It is looking positive and, yes, I am confident." He heaped praise on DIC for all its hard work and added: "It helps that most of the key people we have been dealing with are genuine Liverpool supporters so they understand what we are about."

To find Liverpool then changing their tune so swiftly was "baffling" said one source close to DIC. "Utterly inept," said another.

So what was on the table from DIC, and what is on offer from Gillett? As with all aspects of this tale, there are differences of opinion and interpretation on all sides. Nothing is known publicly about Gillett's offer beyond the share price and promises of non-specific amounts of funding. It is not known how much Gillett money will come from his own cash, and how much from debt-financing.

With DIC's offer, the £157m to buy all the shares was going to be cash, up front. A £200m funding deal for the stadium was in place with two banks, RBS and Bank of America. DIC would assume the £80m debt and restructure it. And a transfer kitty of "over and above what Liverpool asked for" was going to be guaranteed, according to an insider. This kitty would be worth at least £20m net per year.

So what was not to like about such a package, funded by big-time financial players with deep pockets, club affiliation and a desire to keep Parry and Moores on board in some capacity?

Inside the Liverpool hierarchy there was reported unease about a recently leaked document purporting to show DIC intended to borrow to buy, then sell up after seven years for a profit. "Nonsense," says one DIC insider. "The document never mentioned selling up. It just set out anticipated increase in the company's value. And as for other investors, Liverpool knew DIC had partners, and had even met and approved of them." The Independent has learnt that one of these was another Dubai investment firm, Zabeel. Liverpool are saying nothing except that they continue to explore Gillett's bid.

The crunch arrived on Tuesday when Moores met with fellow directors and shareholders, and told them Gillett was offering more per share than DIC. He was urged by a section of "minor shareholders" to explore Gillett's plans. Doing so, and stalling DIC, led to DIC's withdrawal.

It is understood that the minor shareholders who would be happy to sell out for the higher offer, regardless of what else is in Gillett's bid, include Granada (which owns 10 per cent) and two City institutions (three per cent each). The view of the third-largest shareholder, Steve Morgan (five per cent), is not known. He is in Uganda working on a charity project.

Moores, a lifelong red who travels everywhere with the team and even carries the bags, is said to be "appalled and horrified" that he is being perceived as greedy at the expense of Liverpool's long-term well-being. He stands to pocket an extra £8.5m from his shares if Gillett buys the club. His defenders argue that he wants what is best for the club, and was duty-bound to consider Gillett's offer, even though the DIC deal had been verbally agreed, and that he was worried he would be unable to deliver the 90 per cent of the shares necessary for DIC's absolute control, sparking more unrest.

Rafael Benitez, Liverpool's manager, who turned down Real Madrid last summer on the promise of massive new investment, said: "I have every confidence in the board and I trust their decision."

The club continue to walk on through a storm, with no one's head held especially high.