Deutsche Boerse Hedge Funds Back Glazer’s United Bid

by Phillip Morton, Investors Offshore.com

17 May 2005

Malcolm Glazer, the American sports tycoon who is currently the talk of the footballing world with his takeover of Manchester United, the world's most financially successful soccer club, is financing his buyout with the aid of hedge funds connected to the recent campaign against Deutsche Boerse bosses Werner Seifert and Rolf Breuer.

According to reports, Glazer, who owns the American football team the Tampa Bay Buccaneers, is partly financing the controversial United deal though a £275 million issue of preference shares to three New York-based funds including Citadel, Och-Ziff Capital Management and Perry Capital.

The three hedge funds, which collectively have about $35 billion of assets under management, have a reputation for taking aggressive positions in vulnerable companies. Reportedly, two are also connected to The Children's Investment fund (TCI), a London-based hedge fund registered in Bermuda, which led the campaign against Deutsche Borse's chief executive, Werner Seifert and its chairman, Rolf Breuer.

Yesterday, Glazer managed to lift his shareholding in United above the key 75% level, allowing him to delist the company from the stock market. In response, the board of the football club, one of the first to become a public limited company, is said to be preparing a brief statement "reluctantly" advising those shareholders who have not sold out to accept the Glazer bid.

The next target for the self-made American billionaire, ranked by Forbes as the 278th wealthiest man in the US in 2004, is a 90% holding, which will enable him to force out any remaining shareholders, including those on the present board.

In recent months, Glazer has made several abortive attempts to get his hands on the footballing institution that is United, by far the most successful commercial entity in the footballing world with a global brand recognised from Manchester to Mumbai. The breakthrough came when it emerged that Cubic Expression, the entity owned by Irish businessmen and racehorse owning duo, John Magnier and J.P. McManus, had recently sold its key 28% stake to Glazer.

Shareholding fans of United have fought tooth and nail to prevent Glazer from taking over the club, fearing he will use its not-inconsiderable profits to pay off the debt that he accumulated to finance the highly-leveraged takeover, leaving nothing to be invested in the team or the club itself.

However, while fans worry that Glazer may not respect the traditions of the venerable 127-year-old club worshipped by many millions around the world, and which has dominated the English domestic league for the last fifteen years, he is clearly no mug when it comes to making money from sport. Having bought the unfancied Buccaneers in 1995 for $195 million, he helped steer the team to an unlikely Super Bowl victory in 2003, increasing the value of his investment to around $700 million in the process.

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