THE GLAZER family are said to be willing to offload part of their stake in Manchester United.
But how does selling a football club work? Sun Business editor ASHLEY ARMSTRONG explains.
HOW hard could it be to pull off a Red Devils’ takeover?
Manchester United is a publicly traded company after the Glazers listed the business on the New York Stock Exchange for $2.3billion in 2012.
In Britain, takeovers of public companies are relatively straightforward — a bidder makes an offer to buy all the shares that are traded and the shareholders vote in favour or not.
In the US, companies can have two classes of shares with Class A shares not being as powerful as Class B shares.
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The Glazers own 96.7 per cent of United’s Class B shares, which also have 67 per cent of the entire company’s voting rights.
This means that even if all of the investors in United’s publicly traded Class A shares want a takeover, the Glazers have enough of a blocking vote with their B shares to oppose a deal.
In addition, the Glazers also own United through a Cayman Islands vehicle, which has laws that can delay or prevent a change in ownership.
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WHAT are the rules of the game?
In the UK if there are takeover rumours, there are rules that state a bidder must make an offer or walk away within 28 days.
No such thing exists in the US but Glazers’ control limits the chances of a hostile deal, so a bidder would have to make a ‘friendly’ offer and get them on side first.
Within ten days of a takeover offer, United would have to say whether it recommended or resisted a bid.
HOW much could United be sold for?
In takeovers, bidders have to typically offer a premium to what a company is worth — the ballpark is usually 30 per cent.
After the recent rise on the back of takeover speculation, United’s shares are trading at $2.23bn (£1.85bn) and according to its last accounts it has around £540m worth of debt.
The total valuation adds up to around £2.65bn — stick on a normal premium and that gets you north of £3.3bn.
What is more unpredictable is ego in dealmaking — how much extra will the Glazers want to feel like they’ve done a good deal and not lost money or face?
That’s why a valuation of around £4bn has been touted although the Glazers might want as much as £5bn.
WHAT about United’s debt?
This has been a sore point for fans, with more spent on interest payments at one point than in the transfer market.
But a takeover should mean that the club’s debts would be reworked.
The problem is that interest rates are rising at the moment, which means raising takeover financing through loans and bonds is trickier and more expensive.
HOW could a deal be done?
The names in the frame so far all have deep pockets.
Sir Jim Ratcliffe is one of the UK’s richest men, worth around £11bn.
The United fan made an offer for Chelsea but is understood to have been the lowest bidder.
United has more of an emotional pull for him though and that could soften his stance.
Apollo, a US private equity firm, has over $500bn of assets and this month raised a $13bn new fund.
Bankers caution that Apollo famously doesn’t like to overpay.
Private equity use their funds to put very little cash into a takeover and a lot of debt.
Source: Soccer - thesun.co.uk
