Malcolm Glazer takeover of Manchester United
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After Manchester United F.C. was floated on the stock market in 1990, the high value of the club made it seem unlikely that a hostile takeover would be possible. Nevertheless, in June 2005, Malcolm Glazer succeeded not only in gaining control of the club through his takeover vehicle, Red Football Ltd., but converting it into a completely private company.
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[edit] Increasing shareholding
Glazer had owned shares in the club since 2003, possibly earlier. On 26 September 2003, it was reported that he had increased his share to 3.17%, taking his shareholding above the 3% threshold at which he had to inform the club's management about it. There had already been considerable speculation about the possiblility of a takeover of the club, either by Glazer or by one of several other interested parties. By 20 October, he had increased his shareholding to 8.93%, and on 29 November it was reported that he owned around 15% of the club and had met David Gill, its chief executive, to discuss his intentions. On 12 February 2004, Glazer increased his stake in the club to 16.31% and the following day's Financial Times reported that he had instructed Commerzbank to explore a takeover bid. The club's share price increased by 5% that day, valuing the club at a total of £741m. Glazer increased his shareholding to over 19% the following June, although he was still not the largest shareholder.
[edit] Gaining control
On 12 May 2005, Glazer reached an agreement with shareholders J. P. McManus and John Magnier to purchase their 28.7% stake in the team, giving him a controlling stake with just under 57% of the team's shares. He then managed to secure the stake of the third largest stakeholder, Scottish mining entrepreneur Harry Dobson, taking his share total to 62% of the club. Just hours later, Glazer had bought a further 9.8% stake taking his total ownership to 71.8%.
On 16 May 2005, Glazer took his shareholding in United to 75%, allowing him to end the club's PLC status and delist it from the London Stock Exchange, which he did on 22 June. On 14 June 2005, Glazer successfully increased his share in the club to 97.3%, sufficient enough for full control. On 28 June he increased his share to 98%, enough for a compulsory buyout of all remaining shareholders [6]. The final valuation of the club was $1.47 billion.
Glazer appointed his three sons, Joel Glazer, Avram Glazer and Bryan Glazer as Manchester United board members, to replace the vacancies of resigned board members, some of whom, like Sir Roy Gardner, resigned in protest. According to Smithfield, the London-based public relations firm representing the family, Joel Glazer has been the driving force in the takeover bid and will continue in that role. Joel was said to have been an avid Manchester United supporter prior to the takeover, but it's uncertain if he had attended a match before then.
[edit] The future
The Glazer family's intentions for United remain unclear, but it is thought they will try to expand the club's brand name in the United States, as well as in Asia, where United also has a loyal following.
As a result of Glazer's takeover, a sizeable group of disgruntled United supporters created a new club called FC United of Manchester, which was accepted into the North West Counties League second division, six promotions away from The Football League, and secured promotion in its first season as league champions. With average attendances of around 3,000, the support for FC United is indisputably modest compared to that of its illustrious forebear, but this new team is extremely well-supported, considering the somewhat lowly league the team plays in.
Following the takeover, Manchester United has continued to thrive, with the 2005-06 season seeing Old Trafford's capacity being expanded and a lucrative new shirt sponsorship deal signed in April with American company AIG (which, coincidentally, has a large stake in a hedge fund company which helped to fund Malcolm Glazer's takeover of United).
However in June 2006 Malcolm Glazer made strong indications that he was at Manchester United for the long haul by appointing his other two sons Kevin Glazer and Edward Glazer, along with his daughter Darcie Glazer to the Manchester United board as non-executive directors.
[edit] Refinancing
In July 2006 the club announced a refinancing package. Previously the debt taken on by the Glazers to finance the club was split between the club and the family, but now it will all be in the club. The total amount will be £660 million, on which interest payments will be £62 million a year. This is a 30% reduction in interest charges. The club stated, "The value of Manchester United has increased in the last year, which is why lenders want to invest in the club.... 'This move represents good housekeeping and it ensures that Sir Alex Ferguson will be provided with sufficient funds to compete in the transfer market." The Manchester United Supporters Trust responded, "'The amount of money needed to be repaid overall is huge.... 'The interest payment is one thing but what about the actual £660million? It is difficult to see how these sums can be reached without significant increases in ticket prices, which, as we always suspected, means the fans will effectively be paying for someone to borrow money to own their club."[1]
[edit] Notes
- ↑ US investor ups Man Utd stake. Article on BBC News (26 September 2003). Retrieved on September 5, 2005.
- ↑ Error on call to Template:cite web: Parameters url and title must be specified. Article on BBC News (20 October 2003} (September 5).
- ↑ Share deal sparks Man U bid talk. Article on BBC News (29 November 2003). Retrieved on September 5, 2005.
- ↑ US bid talk lifts Man Utd shares. Article on BBC News (13 February 2004). Retrieved on September 5, 2005.
- ↑ Glazer raises stake in Man United. Article on BBC News (24 June 2004). Retrieved on September 5, 2005.
- ↑ Man United confirm bid approach. Article on BBC News (4 October 2004). Retrieved on September 5, 2005.
- ↑ Glazer stake in Man Utd nears 30%. Article on BBC News (19 October 2004). Retrieved on September 5, 2005.
- ↑ Under UK takeover law, anyone who owns a 30% stake in a company must make an offer for the rest of the company at the price at which they bought their last block of shares.
[edit] External links
| Manchester United Football Club |
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