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The Glazer family have made a new bid for Manchester United, headed this time by sons Joel and Avri. The new offer is thought to be based on 300p a share compared with a stock market valuation of 268.75p a share. The Glazers are believed to have reduced the debt element in the bid from £500m to £300m. The difficulty facing the board is that they have a legal duty to consider whether the offer is in the best interests of shareholders. They may decide to sit on the fence. In any case, the key decision makers are Cubic Expression, the investment vehicle of Irish racing tycoons J P McManus and John Magnier. Fans of the club were particularly offended that the bid came on a weekend when they were commemorating the 1958 Munich air crash that killed eight United players.
The Glazers have come up with an ingenious device to fund their latest bid for Manchester United, but their financial dexterity has left fans unimpressed. Sean Bones, vice-chairman of Shareholders United, said, 'We feel that the new offer isn't much different from the old offer - it's just been dressed up differently.' Oliver Houston of Shareholders United commented, 'The fact remains he will still be using Manchester United's money to buy the club.' Mr Glazer and his family have effectively mortgaged their own stake in the business to fund the bid. £300m will be borrowed in the debt markets while £300m of preference shares will be issued and secured against the Glazer family stake. Several financial institutions, believed to include J P Morgan, will take up these preference shares which will eventually have to be redeemed by Mr Glazer and his family. They appear to have dropped plans for a sale and leaseback of the Old Trafford stadium, but are thought to have included naming rights for the stadium as part of their proposed deal. There are indications that the Irish racing tycoons who hold the key to the success of the bid may not be satisfied with a 300p a share offer. Meanwhile, they have seen the value of their stake increase as United shares went up in value by 4 per cent on Monday.
Manchester United's board have given as little help as they can to the Glazer family's bid for the club bearing in mind their legal duty to shareholders. Indeed, some City analysts think that they have neglected their duty to shareholders. However, the club's lawyers, Freshfields, think that they have legal precedents they can draw on. The board has grudgingly agreed to open its books to Glazer's financial advisers at NM Rothschild for a limited period of 'due diligence'. However, the board stated 'it is unlikely to be able to recommend the bid as being in the best interests of Manchester United, notwithstanding the fairness of the price.' Indeed, 'The board continues to believe that Glazer's business plan assumptions are aggressive and that the direct and indirect financial strain on the business could be damaging.' It said the structure of the bid would 'put pressure on the business of Manchester United, particularly if Glazer's business plans are not met.' The Glazer's latest attempt to win over sceptical fans, who demonstrated outside the club earlier in the week, is to keep up to 25 per cent of the shares publicly quoted on the third tier Ofex market so that they could be traded. This is unlikley to impress shareholder fans. The 'Manchester Education Committee', a militant group of fans, issued threats to the club's directors as well as the Glazer family and their financial backers.
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