Bank dumps Glazer after United are left in crisis

Malcolm Glazer, the American sporting entrepreneur apparently determined to take over Manchester United, yesterday exacted a spectacular revenge on the club's board, a group that he perceives as repeatedly thwarting his ambitions.

Malcolm Glazer's attempt to destabilise Manchester United by voting to dismiss three members of the club's board backfired spectacularly last night when his bankers and the PR company handling his proposed takeover both resigned. Glazer's attempt to take control of Old Trafford now appears fatally damaged.

The resignation of JP Morgan, who had agreed to fund half of Glazer's £800m offer for United, was the final action of an astonishing day that began with the American sports entrepreneur flexing his muscles. Maurice Watkins, United's legal adviser for 20 years, Andy Anson, the newly-appointed commercial director, and Philip Yea, a non-executive director, all lost their seats as Glazer cast his 28.1 per cent stake against them at the annual meeting.

Some in the City saw this as a deliberate act of destabilisation prior to launching a hostile takeover. As a direct result, his bankers quit. A source close to the Glazer bid said: "He acted in direct opposition to the advice given to him by three sets of advisers; financial, legal and PR. The view was taken that this was not conducive to a successful bidding process."

The owner of the Tampa Bay Buccaneers American football team had demanded United hand him confidential information, threatening to vote against the re-election of the three directors if it was refused. Although he was not represented at Old Trafford for yesterday's annual meeting, Glazer carried out his threat.

The resignation of JP Morgan leaves him dreadfully exposed. He has spent around £200m, half of it his own money, half borrowed from a German bank, building up his stake in United. Although he may find another bank to put together another offer, the way in which JP Morgan resigned makes this a difficult task. He may have to sell Manchester United shares to repay his German backers if there is to be no takeover.

Without his bankers and with Cubic Expression, the investment vehicle for the club's largest shareholders, JP McManus and John Magnier, refusing to deal with him, Glazer's bid now appears dead in the water.

However, United, who broke off negotiations with Glazer last month claiming his proposals would plunge the club into unacceptable levels of debt, begin this morning with a board of just two executives; David Gill, the chief executive, and the finance director, Nick Humby.

The loss of three directors stung the club into a furious and almost unprecedented reaction. In a statement United criticised its second-biggest shareholder, claiming they were "disappointed by the outcome which we do not believe is in the best interests of the company.

"On 25 October, we announced that the board had undertaken discussions with the Glazer family's advisers in relation to the outline business plan that would be used to support an offer. At that time, the board stated they would not support any offer underpinned by the structure that had been outlined and therefore terminated discussions.

"Although the Glazer family were well aware of the board's position, they continued to press for access to confidential information about the company and made it clear that, if they were not granted the ability to carry out a due diligence search, then they would vote against certain resolutions at the AGM.

"As we said at today's AGM it remains the board's intention to have constructive discussions with the Glazer Family and other interested shareholders in order to seek to develop a long term solution that brings stability to the Company's ownership structure."

Two of the names Glazer used his stake to unseat ­ Anson and Yea ­ would not mean much outside the corridors of Old Trafford. However, Watkins is a very big beast for Glazer to have felled.

The irony is that Watkins did business with Glazer earlier this year, selling him one million United shares. That earned Watkins a can of paint tipped over his car and yesterday it brought him dismissal from a board he had served on for 20 years ­ the first seven of them before the club became a plc. There were shouts of "Sack him!" when his name was mentioned at the meeting.

Although he retained five million shares, Watkins' actions angered fans vehemently opposed to Glazer. Shareholders United, the alliance of small shareholders that controls around 17 per cent of the club, had a policy of abstaining on any vote to re-elect him. This move effectively sealed his fate, since Cubic Expression, which owns 29 per cent of the club, also abstained.

However, Shareholders United urged the board to resist Glazer vigorously. "He doesn't do dialogue, compromise or openness," said their spokesman, Oliver Houston. "He wants to ride roughshod over Manchester United. We don't want him and we will pursue any legal means to keep him out."

Sean Bones, the vice-chairman said: "It's a huge miscalculation by Malcolm Glazer. It does put Man United in an unstable position and it will be a rallying call for all Man United supporters."

Analysis

By Damien Reece City Editor

Annual Meetings can be stormy affairs, and often attract grumpy shareholders, but an AGM that votes three directors off a company's board and pitches it into all-out war with its biggest shareholder is almost unheard of in City history.

Malcolm Glazer's hostile move to oust Maurice Watkins, Philip Yea and Andy Anson is the ultimate hostile tactic that an angry investor can deploy, short of bidding for the company itself.

Of course this was Glazer's original plan, foiled last month, and as an act of revenge it is impressive. It also reveals a fairly brutish sense of tactics seldom seen in the City these days even in the most hostile situations.

Glazer told United that unless it gave him and his advisers access to its books as part of their bid preparations, they would wheel out the heavy artillery and vote against resolutions at the AGM. Not only does it destabilise a large public company, it humiliates the biggest sporting brand in the world. However, damaging the business cannot be in Glazer's long-term interests.

Glazer at least warned the board that this would happen but with most of the company's other shares tied up in the hands of John Magnier, JP McManus and the Old Trafford fans there was nothing they could do.