Directors of Manchester United are meeting Thursday over the potential sale of 25 per cent of the club’s shares to billionaire Jim Ratcliffe but less than 24 hours to the meeting, it is still not clear if the board meeting, long in the diary, will achieve anything significant.
Front of mind will be the proposed purchase of 25 per cent of the club by Sir Jim Ratcliffe after Qatari royal Sheikh Jassim withdrew his bid to buy United on Saturday, leaving the bid from Ratcliffe’s INEOS as the only option on the table.
Ratcliffe, 71, remains in discussions with the Glazer family over taking a minority shareholding in the club.
And according to a source at United, who requested anonymity as they did not have permission to speak for this article, it is now unlikely that a deal will be in place in time for the club’s board of directors to vote on the proposal on Thursday. A potential announcement is still considered to be several weeks away.
Here’s what we know.
Is a vote guaranteed to take place on Thursday?
No, it isn’t.
The board meeting had already been in the diary for some time and will take place in the afternoon to accommodate the Glazer family living in a different time zone. It is likely to be a virtual event.
It is now increasingly unlikely that a deal between the Glazer family and Ratcliffe will be at a stage where a vote can be held.
Negotiations over the make-up of Ratcliffe’s proposed minority investment are continuing and there is still plenty to be ironed out.
While there is still time for a deal to be agreed before Thursday’s board meeting, meaning a vote could happen, there is a strong sense that will not be the case.
Why could a deal still be weeks away from being agreed upon?
Quite simply, there is a lot to negotiate.
There are so many unanswered questions on both sides, including whether Ratcliffe will be buying Class A or Class B shares, what happens to the other shareholders, whether the Glazer family will be diluting their shares, and so on.
If Ratcliffe is to take control of the club’s sporting decisions, leaving the Glazers to run the commercial arm, then a solid legal framework will need to be drawn up and agreed upon by both sides.
This takes time, and neither party is going to want to rush into a deal. There is also the not-so-small factor of whether Ratcliffe’s proposed 25 per cent shareholding will turn into a full takeover in due course.
The terms of a staggered takeover will need to be negotiated and agreed upon.
Why would the Glazers be open to giving up sporting control?
United’s on-field success has dried up since Sir Alex Ferguson retired at the end of the 2012-13 season.
The Glazers are responsible for this and, ultimately, the lack of silverware has undermined the value of their asset.
Ratcliffe has come along and offered to pay a premium to own 25 per cent of the business and clearly feels he can do a better job of running the sporting operation.
If the British billionaire comes in and has a better go of it than the Glazers, then the value of their remaining shares will grow in value as a result, so it is a win-win for them.
What happens once a deal has been ratified?
United’s stance ever since announcing the strategic review that opened the door to external investment has been that when there is something to say, they will say it. No further comment has been provided since they commissioned the review.
Due to the club being listed on the New York Stock Exchange (NYSE), they will be required to make a statement to the market once a deal has been agreed and signed off. In the United Kingdom, the Takeover Panel — a regulatory body that ensures all shareholders are treated equally during takeover bids — instructs a company to issue a statement.
When there is something material to be announced to investors, then that is when the club will most likely go public.
It is worth remembering that if a deal is presented to the board for them to vote on, it is the Glazers who control the board and the shares, and own the club, so if they want something to happen, it will happen.
Other directors and non-executive directors have a voice and there have been occasions where they have spoken up, as The Athletic detailed regarding one of Ratcliffe’s earlier proposals.
Will other shareholders have a say?
The only constraint on the Glazers pushing through a deal is litigation from unhappy shareholders.
Other shareholders can voice their dissent over a potential deal but due to the structure of the shares, there is little else they can do.
When the Glazers listed United on the NYSE in 2012, they protected themselves by inserting a mechanism that essentially blocks anyone except from other family members from owning Class B shares. Only Class A shares are traded on the market.
Importantly, Class B shares hold 10 times the voting rights of Class A shares, so are the key to making decisions at United.