US billionaire Mr Malcolm Glazer has submitted a detailed proposal to Manchester United plc's board that could lead to a €1.14 billion offer for the company.
The board confirmed in a statement yesterday that it had received the "detailed proposal subject to various preconditions which may form the basis of an offer for Manchester United from Glazer".
While the company did not reveal the detail of Mr Glazer's offer, it is understood to value the club at £786 million sterling (€1.14 billion) or £3 a-share, the same price he intended offering last autumn before his original bid failed in a row with his bankers.
As Mr Glazer's business, the Glazer Family Partnership, already owns 28.1 per cent of the company, he will have to pay in €820 million to buy out the remaining equity, adding the 28.89 per cent owned by Manchester United's biggest shareholders, Irish investors Mr John Magnier and Mr JP McManus. They hold their stake through a company, Cubic Expression.
The Glazer partnership originally intended borrowing €715 million of this. However, reports yesterday said that the borrowings would be reduced to around €430 million in the revised offer. The Manchester United plc board shot down the previous proposal on the basis that this would have imposed a dangerously high level of debt on the company had it succeeded.
Mr Glazer intended using the club's revenues, generated from ticket sales, television rights, sponsorship and merchandising, to pay down the debt. This, in turn, would have limited its ability to pay for players, which is central to a soccer club's success.
The board refused the partnership access to the company's books last autumn. Mr Glazer retaliated by opposing a number of candidates for election to the board at Manchester United plc's annual general meeting in November. Mr Glazer's bank, JP Morgan and UK-based public relations adviser Brunswick then walked away from the deal. Mr Glazer has since recruited Rothschild Bank to support the revised offer.
The Cubic Expression stake is one of a range of investments held by Mr Magnier and Mr McManus, who are most associated with bloodstock and horseracing.
The Glazer partnership also has to convince the club's fans, who have been the most vocal opponents of the bid since Mr Glazer began buying shares in the company in early 2003.
Around 35,000 fans hold 16 per cent of the company between them.
Under English company law, Mr Glazer needs 90 per cent acceptances before any offer becomes unconditional. Thus, the fans' stake is enough to block a bid if they act in unison.
