Glazers surprise markets with plan to float Manchester United in US

By MARTIN FLANAGAN
Published on 05/07/2012 00:00

MANCHESTER United wrongfooted investors yesterday by choosing the New York Stock Exchange for its flotation, ending months of speculation over where the football giant would list and raise money to cut its £400 million debt mountain.

News of the float comes after the club, owned by the American Glazer family, first touted an initial public offering (IPO) in Hong Kong and then a potential $1 billion (£641.2m) listing in Singapore in the second half of last year. The Singapore plan was put on hold because of financial market volatility.

United’s filing with the US Securities & Exchange Commission is to raise up to $100m in a far smaller IPO of its Class A ordinary shares in New York.

In America the amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the float could be different, analysts said.

Josef Schuster, founder of Chicago-based financial services firm IPOX Schuster, pointed out: “The smaller the float, the higher the relative valuation can be.

“This may just be a strategy initially to make it appear like a low float IPO. Traders may believe if the deal is very low, then shares can rise at the opening.”

The New York float location was still something of a surprise, analysts said.

United has a global fan base of 659 million, according to a survey commissioned by the club last year – with almost half of fans in the Asia-Pacific region.

Jeff Ritter, a flotation expert from Florida University, said: “It remains to be seen how much the club is going to benefit in the US where the sport is not very popular. The perfect place for it to have listed should have been London.”

The Glazers are well known in the US as owners of the Tampa Bay Buccaneers American football team. However, they have faced opposition from United fans after taking over the club in 2005. The deal was financed by huge borrowings, with the family then using club profits to pay off the interest on the loan.

Critics said the family were therefore effectively taking over the club with its own money. United’s debt at 31 March was £423.3m ($663.7m) according to the filing. The Glazers intend to use the net proceeds from this offering to repay debt.

“It is going to come down to the valuation. US investors are not going to jump on it right away,” Schuster said.

The Glazers will hold class B shares, which will have ten votes each representing 67 per cent of the voting power of all shareholders, keeping the club’s management within their control.

Under the reorganisation, the team would become a wholly-owned subsidiary of Manchester United Ltd, a new holding company based in the Cayman Islands.

US investors are familiar with the dual-class share structure, which has been used by household names such as Google, Facebook and News Corp.

Jefferies, Credit Suisse, JPMorgan, Bank of America Merrill Lynch and Deutsche Bank are underwriting the IPO, says the prospectus. The club did not reveal how many shares it plans to sell or their expected price.