Andy Green, MUST's Director of Finance (and in his day job Head of Investment at Rockpool Investments LLP) gives his analysis on the latest SEC filings relating to the "Strategic Review" which resulted in the investment by Sir Jim Ratcliffe.Latest SEC filings - what it tells us about the bids for United
Over the last month, sports journalists, pundits and Twitter users have had a new fun task of trawling through hundreds of pages of United’s filings with the US Securities and Exchange Commission (“SEC”) relating to Sir Jim Ratcliffe’s investment in United. The club is obliged to file these documents because it is listed on the New York Stock Exchange. The US authorities and legal system take SEC filings very seriously, and providing inaccurate information in them can lead to huge fines or even prison sentences for the directors of companies or lead to the lawyers who drafted them being disbarred. So if it’s in an SEC filing, it can be relied upon as being true.
The filings published on 17th January, alongside United’s Q1 financial results, make particularly interesting reading as they contained a detailed timeline of the club’s infamous “Strategic Review” process that began in November 2022 and ended on Christmas Eve 2023.
The club has to set out this timeline because it is recommending the tender offer that SIr Jim is making for 25% of the listed A shares to shareholders. By setting out who offered what and when during the process it is giving shareholders the information they need to appraise the tender offer.
So what have we learnt?
How the process worked
Sir Jim Ratcliffe’s proposals
The Jassim proposals and process
Why were SJR’s earlier offers rejected?
In value terms per B share, SJR’s May offer valued the B shares at more than the final offer (because of the price in the put and call options he was proposing). The offer also provided the Glazers with a full sale of their B shares, albeit over time. So why was this rejected?
It seems from the filings that there was considerable concern, especially from the non-Glazer directors, over the risk of United and its directors being sued by the A shareholders if they weren’t included. At no point until July did SJR make an offer for any A shares. Why? Well presumably because they were of no importance in taking control of United. The B shares alone did that, so why bother spending money on the A shares?
Furthermore, even SJR’s best (May) offer for the B shares would only have yielded an average price of $33.80 per share over 5 years. That is still well below the $35.25 Raine told Jassim might be agreeable.
Comparing the two bidders’ proposals
We can now see that SJR offered more money to the B holders (i.e. the Glazers) at every point until June 2023. At this point Jassim was offering 0.6% more and immediately rather than over time, but was offering a lower price to the A holders which the board wasn’t willing to countenance.
The main difference between the two is not actually price, it is proof of funds. SJR’s advisors provided that everytime he changed his offer. Jassim never did….
The SEC filings make it clear that when the “Strategic Review” began, the Glazers wanted one of two things; either a full sale of United or a minority investor who would put in new funds. If they weren’t going to sell the club, they had to get new money into it. It’s almost as if they recognised that it was in a bad way…..
As for SJR, he wanted control of Manchester United. He could have got that by making an offer for all the shares, not just the Bs, but he never did. He and his advisors presumably disagreed with the club’s lawyers about the litigation risk of buying the B shares but not the A shares. In the end he got a sort of control, but only over the football side of the business, and lots of protections for himself as a minority shareholder. He got this at far lower cost than his proposals to buy all the B shares, but he still has to work with the Glazers. We’ll have to see how it works in practice.