Why would SJR consider dumping £1.5B for the club when it just buys him a minority stake? Well, let us consider:
If he buys up approximately 28.7% of the voting rights, he can effectively block the Glazers from selling to ANYONE ELSE other than him. This is due to the 2/3rd's majority requirement found in the SEC filings to pass a special resolution.
Because of their increased voting rights, the holders of our Class B shares will be able to exert control over us and our significant corporate decisions.
Trusts and other entities controlled by six lineal descendants of Mr. Malcolm Glazer collectively own 4.37% of our issued and outstanding Class A ordinary shares and all of our issued and outstanding Class B ordinary shares, representing 95.62% of the voting power of our outstanding capital stock. See “Item 7. Major Shareholders and Related Party Transactions – A. Major Shareholders.” Each Class A ordinary share is entitled to one vote per share and is not convertible into any other class of shares. Each Class B ordinary share is entitled to 10 votes per share and is convertible into one Class A ordinary share at any time. In addition, our Class B ordinary shares will automatically convert into Class A ordinary shares upon certain transfers and other events, including upon the date when holders of all Class B ordinary shares cease to hold Class B ordinary shares representing at least 10% of the total number of Class A and Class B ordinary shares outstanding. For special resolutions, which require the vote of two-thirds of the votes cast, at any time that Class B ordinary shares remain outstanding, the voting power permitted to be exercised by the holders of the Class B ordinary shares will be weighted such that the Class B ordinary shares shall represent, in the aggregate, 67% of the voting power of all shareholders. As a result, the holders of our Class B shares will be able to exert a significant degree of influence or actual control over our management and affairs and control all matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation, or sale of all or substantially all of our assets. The interests of the holders of our Class B shares might not coincide with the interests of the other shareholders. This concentration of voting power in our Class B shares may harm the value of our Class A ordinary shares, among other things:
- Class B shares automatically convert to Class A shares unless you're transferring to someone other than another Class B share holder.
- Special resolutions (required for a full sale or to transfer Class B shares to someone that would otherwise be ineligible) require 2/3rd majority of the votes cask.
Presuming SJR can convince two of the siblings to sell, such as say Darcie and Kevin (both who are pretty well known for wanting out), he can get around 31.92% of the voting rights. Of course this means that the other siblings will have to approve of the transaction (or at least 2 of them will have to, Joel and Bryan's shares are enough to tip over the 67% mark along with Kevin and Darcie's).
Why would he want this? Because he will have put himself in the position where he will either benefit greatly from a large sale (e.g. that $10B figure) OR he can basically veto any Qatar deal (the remaining siblings will not have enough votes to meet the 2/3rd standard) and keep the other siblings at the negotiating table for a lot longer until they agree to sell to him.
He would not have to fund the entire purchase in one go, he can stretch it out over a few years which could benefit him if he ends up buying a large share of the stocks in a better lending market (higher interest rates, cost of capital is more, buying it all now costs more).
Ultimately, it would be the similar to how Malcom Glazer originally bought the club. He bought it in spurts, not all in one go (courtesy of
/u/sauce_murica in his
excellent Green and Gold series). This is probably the most likely way he could buy the club at closer to what the Glazers value it at.
March 2003 - Glazer buys 2.9% stake in club
March 2004 - Glazer says he has "no current intention" of making a bid
June 2004 - Glazer's stake in club nears 20%
October 2004 - United confirms bid approach from Glazer, as his stake nears 30%
November 2004 - Glazer ousts three directors from United's board
December 2004 -Glazer makes revised bid
February 2005 - Glazer makes new bid approach, valuing United at £800m, the club later opens its books to the tycoon
14 April 2005 - Glazer moots £800m bid for club
28 April 2005 - Takeover Panel sets 17 May deadline for Glazer to announce whether he intends to buy United
12 May 2005 - Glazer launches formal takeover bid for United after upping his stake in the club to almost 57%
I don't say this to say I'm
optimistic of any transaction, just merely trying to explain why SJR might do this.
