As reported in Backbeat a few months back, Glazer’s takeover attempt has opened a can of worms. The Guardian reports:
'The battle for control of Manchester United between the board and corporate raider Malcolm Glazer has reached a standoff. But the struggle for Britain's most popular and valuable football club has raised major issues of company law. It has also seen one of the most dramatic cases of consumer intervention through share-buying, as fans have flocked to the supporters' trust to vote against the takeover.
‘The dispute strikes at the heart of what UK company law means by "the company" - to whom the directors owe a fiduciary duty. Some would prefer this to be interpreted narrowly, as referring solely to the short-term financial interests of the shareholders. So if the price is right, any takeover bid should be supported - even if the purpose of the buyer might be at odds with the purpose for which the company was founded and had since been operating.
‘A broader view would take into account the longer-term interests of shareholders, as well as other stakeholders, including consumers, staff and local community. The Glazer proposals highlighted the conflict between the interests of the company defined broadly, which is doing rather well, against the interests of shareholders to sell to the highest bidder.
‘The situation is complicated by the fact that the overwhelming majority of shareholders - in terms of numbers rather than total shareholdings - are supporters, more interested in the long-term fortunes of the team than the share price. Collectively they own less than 20%, with both Glazer and Cubic Expression (the investment vehicle for JP McManus and John Magnier) holding almost 30% each. But a debt-funded takeover might require a wholesale takeover of the company, so even the 17% held by individuals could prove a block.
‘Under UK law, if one shareholder owns 90% of a company, it can seek to compulsorily purchase the other 10%. If Glazer found a bank to lend him funds to launch a bid, the fans would urge shareholders not to sell. But if that failed, and the fans were left with less than 10% - so Glazer could attempt to acquire them against the will of their owners - Shareholder United would turn to the courts.
‘If it ever got that far, it would be an emblematic case. The question would be whether perhaps 40,000 shareholders should be disenfranchised and forced to sell their stake in what they regard as their football club to one individual who, they believe, would act against the interests of the company?’