The Glazer family can ‘force’ Sir Jim Ratcliffe to sell his 25 per cent stake in Manchester United in 18 months, a document has revealed.
Ratcliffe was in attendance during the Red Devils’ Premier League draw against Tottenham at Old Trafford on Sunday after agreeing a minority stake for £1.3billion in the club.
His investment is awaiting approval from the Premier League but should come in the next three to five weeks.
It was reported last month that if the Glazers agree to a full sale of the club in 18 months, the British billionaire will be ‘obliged’ to sell his shares and a fresh report from The Times has given us some more details.
The report states that the Ineos chairman has the power to make the first offer should the majority owners decide to sell the club outright, but he is in danger of losing out to another buyer who offers more money.
Ultimately, the Glazer family ‘have the power to sell Manchester United to another buyer after an 18-month window has passed’, meaning Ratcliffe would be ‘obliged’ to sell his 25 per cent stake.
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The Glazers’ deal with Ratcliffe does state that the majority owners can not ‘solicit or encourage new offers for the 12 months after his tender offer is completed on February 13’ but can sell outright six months later.
The document states: “For so long as the Glazer parties are the majority holder, following the date that is 18 months after the closing date and in connection with any sale of the entire company, the Company Board may require the Trawlers party to sell all of their company ordinary shares and take such other actions as are reasonably necessary to effect the full sale.”
This is known as a ‘drag-along right’, which guarantees Ratcliffethe equal amount “as the highest amount paid to any other shareholder of the same class of shares”.
The document adds: “If the sale occurs within three years of the closing of the offer, the Trawlers parties must receive at least $33 per share, which is the same price as the offer price.”
It is also added that the Glazers or their representatives must not “directly or indirectly, initiate, solicit, encourage, facilitate, participate in, enter into, approve, consummate or otherwise support any full sale prior to…12 months after the closing date”.
If you weren’t sure, ‘Trawlers Limited’ is the 71-year-old’s investment vehicle.
The report adds that a separate filingon the United States Securities and Exchange Commission (SEC) says Ratcliffe’s rival bidder, Sheikh Jassim, failed to meet the Glazers’ asking price and also ‘did not provide the required financial guarantees’.
“Bidder A’s proposal did not provide customary financing commitment letters. After discussion, the board of directors requested that the representatives of Manchester United continue to seek improved value for the shareholders and require Bidder A to provide sufficient evidence of its sources of financing that would be required to consummate such a transaction,” the filing states – with Sheikh Jassim’s bid referred to as ‘Bidder A’.
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