Ratcliffe nears $33-a-share deal for a minority stake in Manchester United

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Sir Jim Ratcliffe is closing in on a roughly $33-per-share deal with the Glazer family that would see the British tycoon buy about 25 per cent of Manchester United.

If agreed, the deal would value the Premier League club at about $5.4bn and implies an enterprise value of more than $6bn including debt based on the existing number of shares in issue. It would mark the most significant ownership change for the 20-times English football champions since the club’s initial public offering in 2012.

Under the terms of the deal being discussed, the Ineos founder is set to buy roughly 25 per cent of United’s A and B shares, according to people familiar with the discussions. The pricing was first reported by Sky News.

There is a desire to get the deal agreed by the end of next week and before the US Thanksgiving holiday on November 23, according to people familiar with the matter. However, they cautioned that negotiations are ongoing, meaning the timeline could change. 

Next week will mark one year since the Glazers, who have controlled United since a £790mn leveraged buyout in 2005, said they would consider a sale or an injection of capital from outside investors. 

The American family, who also own the Tampa Bay Buccaneers NFL franchise, are controversial among United fans because of their use of debt to fund the 2005 acquisition, putting the liabilities on the club’s balance sheet.

The current sale process has cast uncertainty over United, which earlier this week said that Richard Arnold had decided to step down as chief executive and would be replaced by general counsel Patrick Stewart until a permanent replacement is identified.

Ratcliffe’s flexibility and willingness to consider a range of proposals have been key to establishing him as the favourite to strike a deal. 

The Ineos founder saw off competition from Qatar’s Sheikh Jassim bin Hamad al-Thani, who dropped his takeover bid last month and withdrew from the process.

Ratcliffe had originally intended to buy majority control but has had to reformulate his bid due to pushback from minority shareholders, who warned of legal consequences if they were left out of the deal.

The Glazers own more than 110mn B shares, each of which carries 10 times the voting rights of one A share. The club’s 54mn A shares have traded on the New York Stock Exchange since an IPO in 2012. Typically, B shares convert into A shares when the Glazers sell.

However, one of the people said the goal is for Ratcliffe to hold B shares because of the appeal of the voting rights.

Ratcliffe and Ineos could increase their stake at a later stage but there is no precise timeline for doing so, the person said.

United and Ineos declined to comment. United shares rose by more than 8.5 per cent in pre-market trading on Friday, hitting $20, valuing the club at more than $3bn.

Ratcliffe is also poised to invest an additional sum in the region of $300mn in addition to buying existing equity, according to the people familiar with the situation.

The money, which can be used for a variety of purposes, signals Ineos’s intent to improve United’s infrastructure, including the club’s Old Trafford stadium. 

Rebuilding Old Trafford from the ground up could cost an estimated $1.5bn to $2bn, but other options, such as redeveloping the existing ground, would be less capital intensive.

It is unclear what the deal’s implications would be for United’s revolving credit facility. This has provided liquidity, including funds for transfers, to the club in the wake of the pandemic, which temporarily hit revenues and hit the balance sheet.

A deal would also test whether Ratcliffe and the Glazers are able to turn around the club’s performances on the pitch. United have not won the Premier League title since 2013, when Sir Alex Ferguson — the most successful manager in the club’s history — stepped down.