The never-ending Manchester United deal saga

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

One Bill Ackman is still at it to start: The hedge fund billionaire escalated his battle with Axel Springer and its minority investor KKR after a lengthy set of missives. “This is the best and most important thing I have ever written,” he posted.

Plus, one jackpot: Denise Coates’s transformation of her family’s betting shops business into an online gambling juggernaut has made her one of the highest-paid executives in the world. But can the Bet365 “cash machine” keep paying out? Read the FT feature here. 

In today’s newsletter:

Why Jim Ratcliffe’s football deal took so long

For readers who really switched off over the holidays, billionaire Jim Ratcliffe finally signed a deal to buy a hefty minority stake in Manchester United. He’s on course to end up with about 29 per cent of the club by the end of the year, for around $1.3bn.

The transaction, which values the English club at about $6.3bn including debt, is an illustration of how high finance has infiltrated football. 

On one side, it involves an English club headquartered in the Cayman Islands, listed in New York and controlled by six ultra-wealthy siblings who don’t always have the same priorities. On the other, a self-proclaimed “local lad” in Manchester-born chemicals tycoon Ratcliffe, who is a resident in Monaco and using an Isle of Man entity to buy into United. Got that?

But the real mystery was why United waited until Christmas Eve to announce a deal whose main elements had been substantially agreed weeks earlier. Not even the secretive Glazer family’s reputation for being “slow decision makers” could explain the whole story. 

So, in a flurry of meetings and calls, the FT revealed that at the heart of the matter were board concerns about how minority shareholders would be treated in future transactions between Ratcliffe and the Glazers.

There are strong protections for Ratcliffe, however, who has “right of first refusal” for one year after the transaction closes. So-called drag-along rights mean that he could be forced to sell his shares, as long as he receives at least his $33 buy-in price, as part of a full sale 18 months from the closure of the deal.

The FT’s inquiries and resulting story accelerated an announcement that hadn’t been on the cards until a last-ditch board meeting to push the deal through.

One person close to the deal said some changes were made to it to assuage concerns. But more importantly, the board vote to proceed with Ratcliffe excluded two of the non-executive directors who had raised concerns, with the Glazers pushing ahead with the deal.

The question for all concerned is what’s stopping Ratcliffe from striking private deals with the Glazers in the future without extending an offer to class A shareholders?

With a shareholder vote and Ratcliffe’s tender offer yet to be scheduled, minority shareholders, including activist investor Ricky Sandler of Eminence Capital, are on alert.

“If Glazers are able to unilaterally sell the rest of their shares to Jim without dragging the minority along that’s an untenable position that we will challenge,” Sandler posted on X within days of the announcement.

Meanwhile, the club’s performances on the pitch leave a lot to be desired. It makes for an uphill task for Ratcliffe and his team at Ineos. He’s called in British cycling guru Sir Dave Brailsford and former Paris Saint-Germain executive Jean-Claude Blanc, the latter helping to resurrect Italian side Juventus from relegation following a match-fixing scandal.

A speedy bankruptcy in China 

Until last summer, there was little mention of China’s vast shadow banking industry when it came to the country’s real estate slowdown.

Instead, the focus was on international defaults at developers and domestic halts in the construction of unfinished apartments.

Enter: Zhongzhi. The conglomerate, with its complex array of investment firms and exposures, was typical of a shadow financing industry that had evolved rapidly alongside China’s economy. 

In July, companies listed in Shanghai said Zhongrong, a trust company that Zhongzhi owns a stake in, had failed to make investment payments. It is unclear exactly how much Zhongrong has invested in the property sector, but the trust industry has come under pressure from regulators to reduce its exposure to real estate.

Days ago Zhongzhi disclosed bankruptcy — an unusually quick turnaround in an environment where the defaults such as those of conglomerate HNA and developer Evergrande take years to process. The FT’s Thomas Hale and Cheng Leng set out the details. 

The speed of Zhongzhi’s fall points to heightened concerns from the government towards pockets of financial distress amid a wider loss of economic momentum post-Covid. In November, President Xi Jinping called for “fast discovery and speedy resolution” of financial risks. 

But the failure of Zhongzhi highlights the lack of transparency across China’s economy — especially regarding flows of money that have bypassed the banking system to access real estate projects.

That has added to a climate of uncertainty over where the next issue may appear.

Job moves

• Blackstone has promoted Ken Caplan, current global co-head of real estate, and Lionel Assant, European head of private equity, to newly created roles as global co-chief investment officers. Nadeem Meghji, head of real estate in the Americas, will succeed Caplan alongside Kathleen McCarthy. 

• Wanda Austin has been nominated to join the Apple board. She is the former chief executive of the Aerospace Corporation. Apple also said that Al Gore and James Bell would retire from the board this year. 

• California State Teachers’ Retirement System announced that chief investment officer Christopher Ailman would retire on June 30 after more than two decades in the role. 

• Permira, the private equity investor, has hired Jon Serbousek as a senior adviser to its global healthcare team.

Smart reads 

Number two no more Goldman Sachs’s equities team is back on top after a prolonged period when it trailed its arch-rival Morgan Stanley. And Goldman’s traders are savouring the moment, Bloomberg reports.

Oligarch ties Roman Abramovich, the oligarch placed under sanctions in the UK for his ties to Russia’s President Vladimir Putin, quietly invested $63mn in European start-ups through his relationship with a London-based VC firm, Forbes reports. 

Sole survivor SoftBank has churned through so many senior executives over the past decade that it’s hard to keep up. Meet one man still standing, with this profile in Reuters. 

News round-up

Chesapeake and Southwestern to create US gas titan with $7.4bn deal (FT) 

Morgan Stanley to pay under $300mn to settle trading probe (Bloomberg)

Microsoft neck and neck with Apple in fight to be world’s most valuable company (FT)

Axel Springer pays €776mn in dividends to investors including KKR and CEO Döpfner (FT)

Bank of England fines former chief of Wyelands Bank for ‘multiple’ failings (FT)

Citadel Securities bids for Credit Suisse’s China business (FT)