Just over a year ago, the family that controls Manchester United PLC (NYSE: MANU) indicated that the team might be for sale. The deal was signed on Christmas Eve and cost the buyer, Sir Jim Ratcliffe, about $1.34 billion for a 25% stake and control of football (soccer) operations for the English Premier League team.
Team chemistry
In a statement, Ratcliffe, who is chairperson and CEO of British chemicals giant Ineos, said:
As a local boy and a lifelong supporter of the club, I am very pleased that we have been able to agree a deal with the Manchester United board that delegates us management responsibility of the football operations of the club. Whilst the commercial success of the club has ensured there have always been available funds to win trophies at the highest level, this potential has not been fully unlocked in recent times.
Manchester currently stands eighth in the 20-team Premier League. It plays 3rd-place Aston Villa on Boxing Day (December 26) to complete the first half of the league’s 38-game season.
What $1.34 billion bought
Through his wholly owned company, Trawlers Limited, Ratcliffe purchased 25% of ManU’s class B stock (roughly 27.55 million shares, each entitled to 10 votes) for $33 a share. He also has the right to purchase up to 25% (approximately 13.64 million) of the club’s class A shares at the same price.
The offer price for the class A shares represents a premium of nearly 70% for the class A stock that closed at $19.84 on Friday. At the close of the 2023 fiscal year in June, Manchester United had a total of around 54.54 million class A shares outstanding.
The Glazer family, which bought the club in 2005 for around £790 million (about $1 billion in current dollars), were not united in their desire to sell the team and settled for a cash payday. The family retains control of the company.
Ratcliffe also agreed to invest another $300 million of his own cash in the team. The additional cash will go toward coming up with a redevelopment plan for the team’s Old Trafford stadium.
According to a September report from Forbes, the team’s value is $6 billion, tied for 13th (with the San Francisco 49ers) in a ranking of the world’s most valuable sports teams. It’s the second-most valuable soccer team, trailing only Real Madrid ($6.07 billion). Looked at that way, Ratcliffe got a bargain (25% of $6 billion is $1.5 billion).
In Tuesday’s premarket session, Manchester United stock traded up about 4.7% at $20.77. The stock’s 52-week range is $17.02 to $27.34.
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