Glazer given deadline to make formal bid for United

The endgame in Malcolm Glazer's battle for control of Manchester United was triggered yesterday when United's board said that it would not recommend a proposed 300p per share offer to shareholders, and the Takeover Panel issued the American with a "put up or shut up" deadline of 17 May to announce whether he intends to make a formal bid.

The endgame in Malcolm Glazer's battle for control of Manchester United was triggered yesterday when United's board said that it would not recommend a proposed 300p per share offer to shareholders, and the Takeover Panel issued the American with a "put up or shut up" deadline of 17 May to announce whether he intends to make a formal bid.

The developments are a setback for Glazer but United's fate still rests, as it has done throughout this saga, with the club's biggest stakeholders, John Magnier and J P McManus, who own 29 per cent through their Cubic Expression company.

Glazer, who owns 28 per cent, needs their shares to make certain of reaching the 75 per cent ownership threshold he desires. City institutions would be certain of delivering him at least 20 per cent if he tabled a 300p offer.

At 75 per cent, Glazer can delist United from the stock exchange and rule the club as his personal fiefdom. Without Cubic's stake, that ambition will be in tatters.

Glazer will now try to persuade the Irish racing tycoons to sell, using "fear factor" tactics to encourage them to hand control over to him. It is widely acknowledged that if Glazer's ambitions are thwarted, United's share price will tumble. It stood at 265.25p last night, down 0.6 per cent on the day, but some analysts believe that without a Glazer-inspired "takeover effect" it could plummet to around 220p or lower.

Glazer will no doubt point this out to the Irishmen, hoping they take his money and run. If they agree, and talks will start within days, United could be all but American-owned even before the FA Cup final on 21 May. It is a big if.

Magnier and McManus have maintained a virtual silence on their intentions, aside from saying that their status as "long-term investors" remains unchanged. However, sources in Ireland, familiar with their thinking, have also continued to point out that they sent Glazer packing when he offered them 300p per share last year, and nothing has changed.

That leaves two big questions. Do the Irishmen really believe United's long-term potential as a business is worth a roller-coaster ride on the share price for a year or three? And would they consider being minority shareholders in a Glazer regime, perhaps by selling him 10 or 15 per cent to help him towards 75 per cent, but keeping the rest?

If the answer to the first question is yes, they will not sell. They paid approximately 200p per share on average for their own holding and are rich enough to be flexible.

The answer to the second question is almost certainly no. That scenario would land them the double-whammy of long-term supporter fury as well as a potentially volatile relationship with Glazer.

That apparently leaves the Irish in selling mood only if they doubt United's financial prospects, or are made an offer upwards of 300p.

Privately, it is understood that they feel a liberalisation of TV rights sales is inevitable, and will be profitable, within a few years. If they genuinely hold that view, there is no reason to hand a future premium on their shares to Glazer.

And Glazer is in no position to offer much more than 300p. Certainly his bankers and advisers see no prospect of that, which leaves Glazer hoping the Irish blink at the "fear factor". He is likely to be feeling it himself.

Remarkably, he has no "Plan B" if Cubic rejects his advances. The possibility of what he does if he fails with a bid has not even been discussed with his advisers at Rothschild or his bankers JP Morgan. The latter head a syndicate that would provide £200m-£300m in loans to help fund a bid, and have not been put off by the United board's "neutral" stance of neither recommending nor rejecting the proposed offer outright.

There is even a chance that Glazer could be forced to offload his own United holding at a loss. He paid around 280p per share on average for his stake, so is already sitting on a paper loss that is mounting daily because he borrowed to fund some of his buying.

For the board's part, it left little doubt it disapproves of Glazer but stopped short of outright rejection of his proposed bid. "The board remains of the view that the assumptions in the Glazer business plan are aggressive," United said in a statement. "The board recognises, however, that the price of 300p per share is a fair one and may be attractive to some shareholders of Manchester United.

"Given the board's concerns about the potential impact [of large debts on a debt-free, profitable company] of the proposal, the board has informed Glazer that it cannot provide a recommendation to shareholders to accept any offer made on the basis of the current proposal."

The club responded to the Takeover Panel's deadline by saying it welcomed the intervention.

"Ongoing uncertainty surrounding the potential Glazer offer is disruptive to the business of the company and [the board] considered that, in the current circumstances, it was in the interests of all concerned to have a definitive timetable," a statement said.

So everything rests with Cubic, who are no great supporters of the current board but probably also reluctant to go down in history as the people who handed United to Glazer.

"This puts the ball back in Glazer's court," said Nick Towle, the 50-year-old chairman of Shareholders United, which represents 20,000 investors in the club, commenting of the board's attitude and the Takeover Panel's deadline. "We welcome the fact that he's been given a deadline and we congratulate the board for sticking to its stance."