Sir Jim Ratcliffe. Photo / AP
Sir Jim Ratcliffe has agreed to buy a roughly US$1.3 billion (NZ$2b) stake in Manchester United, ending more than a year of uncertainty over the English football club’s ownership and highlighting continued investor appetite for sports assets.
The agreement to acquire the 25 per cent stake came after a last-ditch board meeting before Christmas to end weeks of delays to football’s highest-profile transaction, and valued the club at about US$6.3b including debt.
It is the latest in a series of record-breaking sports deals, including private equity tycoon Josh Harris’s US$6b acquisition of the Washington Commanders NFL franchise.
British chemicals billionaire Ratcliffe and the Glazer family that owns Manchester United had agreed on the broad terms to buy a non-controlling stake in the English Premier League club in November, but a formal announcement had been repeatedly pushed back.
Ineos founder Ratcliffe said: “As a local boy and a lifelong supporter of the Club, I am very pleased that we have been able to agree a deal with the Manchester United board that delegates us management responsibility of the football operations...we are here for the long term and recognise that a lot of challenges and hard work lie ahead.”
However, he faces an uphill task to restore United to “the very top of English, European and world football”, as the club has fallen behind local rivals Manchester City in the battle for top honours.
One person close to the deal said the announcement was accelerated following a Financial Times report about some board members’ concerns for equal treatment of minority shareholders in future transactions involving Ratcliffe and the Glazers.
People close to the Glazers and United said that efforts had been made to address those concerns. However, the deal was pushed through without two of the independent board directors present, according to three people with knowledge of the matter. Another person said that efforts to address the concerns for minority shareholders had enabled the vote. United declined to comment.
Board members had raised concerns about potential future deals and whether they would allow the Glazers to cash out on terms that would not be extended to other shareholders.
Executive co-chairs Avram Glazer and Joel Glazer said: “Sir Jim and Ineos bring a wealth of commercial experience as well as significant financial commitment... through Ineos Sport, Manchester United will have access to seasoned high-performance professionals, experienced in creating and leading elite teams from both inside and outside the game.”
There is no guaranteed path to control but Ratcliffe could increase his shareholding over time, the person added. The deal is subject to approval by authorities including the Premier League. He is to acquire the shares through an Isle of Man entity called Trawlers, in a nod to a famous quote by former Manchester United forward and captain Eric Cantona.
The situation had been complicated because United has two classes of stock and the Plc is headquartered in the Cayman Islands. The New York-traded A shares have inferior voting rights to the B shares held exclusively by the Glazers.
UK fund manager Lindsell Train, Ricky Sandler’s Eminence Capital and Chicago-based Ariel Investments are among the biggest holders of the A shares, which are largely held by non-family shareholders. Hedge fund billionaire Leon Cooperman has also accumulated a stake. Sandler has previously threatened to oppose any deal that treats minority shareholders differently from the Glazers.
Ratcliffe has agreed to acquire around 25 per cent of the Glazers’ super-voting B shares and 25 per cent of the New York-traded A shares. Each B share has 10 times the voting rights of a single A share.
Ordinarily the B shares would convert into A shares on sale by the Glazers. The announcement said the board had recommended that shareholders tender their shares and approve legal changes that permit the transfer of B shares without conversion.
The British tycoon had previously reformulated the bid because of concerns that arose when his original proposal for majority control envisaged buying out only the Glazer family’s B shares without extending an offer to A shareholders. Ratcliffe subsequently changed the proposal to buy 25 per cent of each share class.
The six Glazer siblings own 110 million B shares. Selling 25 per cent of the total at US$33 would generate more than US$900m for the family, who acquired the club for around £790m in 2005. The deal would value United’s equity at roughly US$5.4b.
The New York-listed club’s stock exchange filings warn that the “concentration of voting power in our Class B shares may harm the value of our Class A ordinary shares” by “delaying, deferring or preventing a change in control”, “impeding a merger, consolidation, takeover or other business combination”, or “causing us to enter into transactions or agreements that are not in the best interests of all shareholders”.
Ratcliffe’'s proposal values United at US$33 a share. The A shares closed at less than US$20 each on Friday. Ratcliffe will also inject US$300m of fresh capital into the club and take responsibility for football operations.
The Manchester United share price hit a high of more than US$27 in February on expectations that the club would be bought in full by Sheikh Jassim Bin Hamad Al Thani, the son of one of Qatar’s richest men. However, his Nine Two Foundation withdrew from the bidding in October.
Written by: Samuel Agini and Arash Massoudi in London
© Financial Times
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