Glazer gains control of Manchester United

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Shareholders in the Premier League club will receive the long-expected formal takeover bid from Malcolm Glazer. NM Rothschild, acting for Red Football Limited the vehicle acting on behalf of Glazer, announced that it had acquired the 75,736,960 shares owned by Cubic Expression, the vehicle holding the 28.7% stake of Irish racing magnates, JP MacManus and John Magnier. The acquisition gives 56.9% of the shares, enough to gain effective control of the club and to enforce any board changes. Red is now required to make an offer for the rest of the shares. The offer for the remainder of shares will be at 300p per share valuing the company at £790m and the Offer document will be posted to shareholders in due course. Glazer can now delist Manchester United PLC from the London Stock Exchange and implement new plans for the club without approval from other shareholders. It is unclear whether Glazer intends to continue buying shares until he reaches the next key threshold of 90%, above which he can force out remaining minority shareholders. Banks and funds, led by U.S. investment bank J.P. Morgan Chase & Co, will provide a £265m loan to Glazer which will immediately be transferred to the club’s own balance sheet and secured against club's assets. The banks will also provide an additional £275m loan in return for which they will be given preferred securities, like preference shares, in United. Glazer will have the right to buy back those securities from the banks over time. The three figures add up to £812m, which is more than the £790m Glazer needs to buy the club's shares. The difference of £22m will go towards paying Glazer's advisers' fees as well as funding the previously announced expansion of Old Trafford. Loans issued to finance the takeover could leave the Glazers family facing debt obligations of up to £894 million within five years of the completion of the deal. The total amount of the £790m bid, £265m is debt secured against assets, with £275m coming from pay-in-kind loans (Piks) which have been taken up by several US hedge funds. The rest is Glazer's family equity in Manchester United. While the £265m debt is likely to carry an annual interest rate of about 6%, the Piks have a higher yield that will see them accumulate interest of up to 18% each year. The club’s board is officially advising shareholders to accept Glazer’s takeover bid.