conduct due diligence. From the Guardian.
JUDGEMENT DAY
conduct due diligence. From the Guardian.
Manchester United are on the verge of granting Malcolm Glazer his wish to
inspect the club's books. Formal access could be confirmed today, although last-minute hitches over the details of confidentiality clauses mean final agreement could be delayed until next week.
The news is bound to inflame tension at Sunday's Manchester derby. Yesterday five MPs also tabled a Commons early-day motion stating that a takeover would be against the interests of supporters and football in general.
United's board appears to have found no reason to deny Glazer's request to
conduct due diligence, the process of checking a company's contracts and other financial documentation. The key issue had been confidentiality. The board was concerned that Glazer should not be able to make public sensitive information if takeover talks subsequently failed.
Equally, Glazer's advisers and bankers were anxious that their hands should not be tied so tightly that they could not get sufficient information. The principal funding for the planned £800m offer, a £300m loan from JP Morgan and about £250m of preference shares, is dependent on satisfactory due diligence.
The United board's ability to resist Glazer has been constrained not just by its legal duty to consider the interests of all shareholders. It also knows that, as a substantial shareholder with a stake of 28.1%, he can call an emergency
shareholders' meeting and table a motion calling for the books to be opened to him.
shareholders' meeting and table a motion calling for the books to be opened to him.
The Commons motion was led by Tony Lloyd, MP for Manchester Central and a patron of Shareholders United, the fans' group with 20,000 members and a stake of about 2% in the club. Its vice-chairman Oliver Houston said: "We will fight this battle in parliament, on the Stock Exchange and through the courts. We will do everything we can to defend our club."
The motion argues that football clubs differ from other trading companies and calls on the Premier League to use its powers to put information about the
benefits and pitfalls of the into the public domain. Lloyd and his fellow MPs also want the Department of Trade and Industry to investigate any bid on public interest grounds.
benefits and pitfalls of the into the public domain. Lloyd and his fellow MPs also want the Department of Trade and Industry to investigate any bid on public interest grounds.