Kroenke Takes Arsenal Controlling Stake, Triggers Offer

Kroenke Group Chairman Stan Kroenke
Kroenke Group Chairman Stan Kroenke. Photographer: Brian Bahr/Getty Images

Stan Kroenke, the owner of National Football League and the National Basketball Association teams, agreed to boost his stake in Arsenal soccer club to 63 percent, triggering a takeover bid for the English Premier League team.

Kroenke pledged to buy 16 percent stakes held by Danny Fiszman and Nina Bracewell-Smith, as well as a small amount of stock owned by the club’s remaining directors, his Kroenke Sports Enterprises said today. The purchase price of 11,750 pounds a share values the club at about 731 million pounds ($1.2 billion). Kroenke is being advised by Deutsche Bank AG.

The American billionaire property developer already owns almost 30 percent of London-based Arsenal, and will have to offer other shareholders the same price as Fiszman and Bracewell-Smith. Kroenke, who owns the NBA’s Denver Nuggets and the St. Louis Rams of the NFL, has been an investor in Arsenal since 2007, and sits on the soccer team’s board. He’ll spend

240.6 million pounds on the new shares.

“We are excited about the opportunity to increase our involvement with and commitment to Arsenal,” Kroenke said in the statement. “Arsenal is a fantastic club with a special history and tradition and a wonderful manager in Arsene Wenger. We intend to build on this rich heritage and take the club to new success.”

By securing the holdings of the third- and fourth-largest shareholders in the club, Kroenke will raise his stake to a total of 62.89 percent. Investors who own more than 30 percent of a company must make a mandatory offer for the remaining shares under stock market rules.

Arsenal’s second-biggest shareholder is Russian billionaire Alisher Usmanov, with more than 27 percent. Unlike Kroenke, he does not have a seat on the board of the club. Rollo Head, a spokesman for the Russian metals magnate, declined to comment.

Arsenal has debt of 110.4 million pounds, and Kroenke is planning to buy the shares with cash and no debt will be added to the team, according to his offer.

The disclosure is likely to be welcomed by the Premier League and the team’s fans after leveraged takeovers by U.S. investors at Manchester United and Liverpool stoked supporter unrest. Arsenal becomes the 10th foreign-controlled team in England’s top division.

Kroenke’s rise at Arsenal comes after a difficult start. The club’s chairman Peter Hill-Wood said the Gunners “don’t need his money and don’t need his sort” when talk of the U.S. sport investor buying the club surfaced in 2007. Kroenke has asked the board to stay in place.

Bracewell-Smith’s family has been connected with the club since 1938. In April last year, she hired Blackstone Group LP to sell the stock after being forced off the board two years earlier.

‘Sports Experience’

“I don’t think there will be a tremendous change in the way that the club has been run,” Arsenal Chief Executive Officer Ivan Gazidis said on the team’s website. “We’re looking forward to Mr. Kroenke bringing also his sports experience to the table.”

Fiszman, who’s fighting cancer, has agreed that Kroenke can buy his shares within 20 days of his death. The Swiss-based diamond dealer moved his Arsenal investment into a trust earlier this year.

Arsenal is the second-richest English team in terms of revenue, behind Manchester United, and fifth in Europe, according to accountant Deloitte LLP.

The club’s last trophy was the F.A. Cup in 2005. Some fans have complained that the current owners and coach Wenger aren’t spending enough on talent to keep up with teams including Chelsea, owned by Russian billionaire Roman Abramovich, and Manchester City, bought in 2008 by Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi. Liverpool was bought by the owners of the Boston Red Sox last year, and the U.S.-based Glazer family owns Manchester United.

Kroenke’s arrival is unlikely to bring big changes in the way the club operates. In a statement on its website today, the team said the investor was committed to the team’s “self-sustainable” model and wouldn’t use his own funds to buy talent.

U.S. Interests

Wenger said he welcomed the move by Kroenke, who also owns the National Hockey League’s Colorado Avalanche and Major League Soccer’s Colorado Rapids.

“I believe he has the best interests of Arsenal at heart,” Wenger said. “He understands the club’s heritage and traditions and our ambition to run the club in a way which protects our long-term future.”

Arsenal won 3-1 at Blackpool yesterday and is second in the Premier League, seven points behind Manchester United, which has played one more game. The league represents Arsenal’s final chance of silverware this season as it already has been knocked out of the F.A. Cup and the Champions League, and lost to Birmingham in the League Cup final.

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