Manchester United Seeks Up to $333 Million in IPO

Manchester United Ltd. (MANU), the English soccer team with a record 19 national championships, plans to raise as much as $333 million in a U.S. initial public offering.

The company and its selling shareholder, the Glazer family, are offering 16.7 million shares at $16 to $20 each, according to a regulatory filing yesterday. United, whose players include England’s striker Wayne Rooney and Welshman Ryan Giggs, is scheduled to price the U.S. IPO on Aug. 9, according to data compiled by Bloomberg.

United chose a U.S. sale after scrapping plans for an offering worth as much as $1 billion in Singapore. The club is taking advantage of a rebound in the U.S. market, which froze this year following Facebook Inc.’s disappointing debut, to raise money to pay down debt, said Ipox Schuster LLC’s Josef Schuster.

Manchester United is such a strong brand and probably has some upside with the merchandising,” said Schuster, who helps oversee about $2.5 billion at the Chicago-based investment firm. “It could still be viewed as attractive by some institutions if it’s priced in the right range.”

General Motors Co. (GM), the world’s largest carmaker, signed a seven-year deal to have its Chevrolet brand on United’s jerseys starting in 2014, according to a press release yesterday. GM agreed to pay more than 25 million pounds ($39 million) per year, according to people with knowledge of the matter.

Club’s Expansion

GM is paying about 25 percent more than insurance company Aon Corp. pays for its logo to appear on the team’s red shirt under its current accord. The carmaker ousted its marketing chief, Joel Ewanick, after its leaders perceived that he failed to make clear some details of the Manchester United contract to the senior management team, the people said, asking not to be identified as the information is private.

United’s sponsorships and product licensing helped generate 89.5 million pounds of revenue in the nine months through March 31, more than one-third of total revenue, filings show. That’s 17 percent more than the year-earlier period.

The club has 659 million followers, United said in its filing, citing a study by Kantar Media. The number of followers is estimated based on the number of respondents in the study who answered, unprompted, that United was either their favorite team or a team they enjoyed following, the filing shows. The IPO values the club at about $4.50 per follower, according to data compiled by Bloomberg.

Stronger Market

The midpoint of the offering range would value the club at $2.95 billion, or about 50 times profit of 38 million pounds in the 12 months through March 31, according to data compiled by Bloomberg. It’s also about 5 times sales of 345.6 million pounds during the same period.

The range makes United more than twice as pricey as Parken Sport & Entertainment A/S (PARKEN), the operator of F.C. Kobenhaven and its stadium in Copenhagen, which trades at 18 times profit and 0.6 times sales in the 12 months through March, Bloomberg data show. Juventus Football Club SpA (JUVE), the Turin, Italy-based team, trades at about 0.5 times sales in the 12 months through March 31, the data show.

Last week was the busiest for U.S. IPOs since April, led by offerings from steakhouse chain Del Frisco’s Restaurant Group Inc. and Tex-Mex restaurant operator Chuy’s Holdings Inc. Companies have raised $36 billion in U.S. IPOs so far this year, according to data compiled by Bloomberg.

‘Makes Sense’

In Singapore by comparison, companies have raised $781 million so far this year through IPOs, down from $7 billion a year before. Earlier this month Global Telecommunications Infrastructure Trust scrapped a $1 billion offering that would have been the city’s largest IPO this year, data compiled by Bloomberg show. It was the largest deal to be delayed in Singapore since Manchester United’s IPO there last year.

“It makes sense for Manchester United to issue its IPO in the U.S. rather in than Singapore,” said Shane Oliver, Sydney- based head of investment strategy at AMP Capital Investors Ltd., which manages almost $100 billion. “IPOs going into stronger markets are usually more successful. They should still get the pricing right.”

United also disclosed that revenue for the year ended June 30 was 315 million pounds to 320 million pounds, compared with 331.4 million pounds in the previous period. Commercial revenue rose to at least 115 million pounds compared with 103.4 million pounds a year earlier. The club had about 437 million pounds of borrowings at the end of June.

Glazer’s Stake

The club is controlled by the Glazer family of the U.S., which acquired United for 790 million pounds in 2005. The Glazers also own the National Football League’s Tampa Bay Buccaneers.

The Glazers, who have full ownership of United, hold Class B shares, which are entitled to 10 votes apiece. The Class A shares being sold in the IPO get one vote each, according to filings. The Glazers will maintain almost 99 percent voting power over the club after the offering, in which a 10 percent stake of the company is being sold.

Jefferies Group Inc., Credit Suisse Group AG and JPMorgan Chase & Co. are leading the U.S. offering for the soccer club. Morgan Stanley (MS), which had been hired to lead the sale in Singapore, is no longer working on the sale. The club plans to list on the New York Stock Exchange under the symbol MANU.

To contact the reporters on this story: Lee Spears in New York at lspears3@bloomberg.net; Tariq Panja in London at tpanja@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Christopher Elser at celser@bloomberg.net

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