Can Sir Jim Ratcliffe’s bid bring Manchester United back to the glory days?

Does SJR-Ineos Bid for a minority stake in Manchester United have a huge potential to transform Manchester United?

In a development in the Manchester United sale saga, the Premier League titans are on the verge of a change in ownership. The Glazers, who set the club up for sale in November 2022 to facilitate its development, have navigated a protracted sales saga with only two serious players left in the game. The Ninety-Two Foundation, led by Sheikh Jassim, and Sir Jim Ratcliffe’s SJR-Ineos, a prominent figure in Manchester, emerged as the final contenders. Recent reports suggest a pivotal turn, indicating that after an extended exclusive period, the SJR-Ineos bid has secured the Board of Directors’ approval at Manchester United. This development could potentially reshape the trajectory of the club, marking a new era under the ownership of Sir Jim Ratcliffe.

The British billionaire is reportedly targeting the purchase of the 25% share owned by the current owners, the Glazers. This strategic deal is designed to usher in a transition of sporting operations to SJR-Ineos while the Glazers step into the background.

However, despite this development, a cloud of uncertainty hovers among the fans regarding the intricacies of the SJR-Ineos bid. To shed light on the current situation, here’s a comprehensive breakdown of what you need to know about the club as it braces for transformation.

SJR- Ineos bid for Manchester United: What made them get ahead of Sheikh Jassim?

According to SEC filings, members of the Glazer family, including Avram, Joel, Kevin, Bryan, Darcie, and Edward, collectively hold 2.3 million Class A shares and 110.2 million Class B shares, giving them a significant 95.63% of the total voting power.

In recent reports, it’s revealed that Sir Jim Ratcliffe is set to acquire a 25% stake in the Glazers’ shares at USD 33 per share. This represents a substantial 66% premium compared to their recent closing price on the NYSE. If the deal goes through, the club’s valuation could reach close to £5 billion, with Sir Jim Ratcliffe’s stake estimated to be around £1.08 billion. This figure is lower than the previously rumoured valuation of £1.44 billion.

Analyzing the alternatives: What are the expected scenarios with the SJR-Ineos bid?

With Sir Jim Ratcliffe acquiring 25% of the shares from Glazers, we can conclude that the total ownership of Glazers at Manchester United would come down approximately to 52%. With both Class A and Class B share with different voting powers, here are the two scenarios that could play out:

Scenario 1: SJR getting 25% of all the total shares from Class A and Class B

In this scenario, SJR is poised to acquire a total of 40.57 million shares. This calculation is based on the existing share structure, which comprises 162.5 million shares in total (comprising 52.29 million Class A shares and 110.20 million Class B shares)

SJR ownership: 25%*52.29 million Class A shares + 25%*110.20 million Class B shares

This would result in Sir Jim Ratcliffe getting 13.07 million Class A shares and 27.55 million Class B shares.

Scenario 2: SJR getting 12.5% of all the shares 

Considering the difference between voting rights, SJR might opt for 12.5% of all the shares that exist in the system. This would mean Sir Jim Ratcliffe would get 20.59 million shares.

SJR ownership: 12.5%*162.5 million = 20.59 million shares

What’s the conclusion then?

In evaluating SJR-Ineos’s potential impact on Manchester United’s voting power, two scenarios come to light. In Scenario 1, if they proceed as planned, SJR-Ineos could command an estimated 25.4% of the voting power. However, in Scenario 2, this figure is slightly lower at around 19.9%.

"Scenario 1: 25.4% of the voting powerScenario 2: 19.9% of the voting power"

Yet, the intricacies run deeper. If Sir Jim Ratcliffe commits to the proposed £245 million investment into the club, it holds the potential to be a game-changer. This injection of funds would not only secure SJR-Ineos’s foothold but also elevate their voting rights to nearly 40%. Such a substantial influence could act as a significant deterrent against any potential takeovers in the future.

When can we expect the final deal?

According to recent reports, the anticipated stock sale via SJR-Ineos Bid could be finalized before the conclusion of the international break. Some pundits speculate that the deal might be sealed by Monday, taking into account the notable announcements of key executives Richard Arnold and John Murtough, who are currently under the Glazers, planning to leave the club at the end of the season.