Sunday, October 01, 2006

Takeover/ New Investor Rumours (Ollie Thinks It Through)

I understand that a rumour has surfaced that Milan Mandaric is about to invest in or takeover our Club. I also understand that the rumour is that John Wardle met with him last week, that a press conference has been called for this Tuesday (3 October) and that there has been a lot of activity in the club's shares over the last week or two.

I am not privy to any information like this and accept that rumours will circulate from time to time (in fact I saw a good one about me a week or so ago!). Anyway, this got me thinking so I'll share with you my personal thoughts by all means drop me a line at if you have another view.

The first thing I thought about was, how much would it take to acquire the club? Well as at Friday's close of business the club was valued at £13.25m at a mid price per share of 24.5p each. I can't see the club being bought at that price though, mainly because the price being offered per share is going to have to be attractive to the key shareholders with percentages of the club in their hands all of which are currently sitting on some pretty heavy paper losses at the moment. In my opinion the price to be paid per share is going to have to be well in excess of 30p a share let's say 40p for arguments sake. There are 54,089,373 shares in issue and at 40p per share that would value the club at £21.63m. Any potential buyer would have to pay numerous lawyers, accountants and bankers fees for putting a successful takeover together and you can comfortably add another £500k, probably more, to that figure for their roles.

If the club was bought then the purchaser would (I guess) also have to deal with John Wardle and David Makin’s loans which stand at just under £20m. On top of that, I couldn’t see any new investor coming in and not giving a transfer kitty to the manager. If they did, then that would be a quick way to upset the supporters and that is the last thing any new investor would want to do. So let’s agree on a smallish kitty of £10m being provided.

So from my back of a packet calculation I think it would cost a potential investor over £50m to acquire the club, pay off JW & DM and provide a kitty to the manager. Of course I haven’t mentioned the fact that the club doesn’t own the freehold of the stadium (so no chance of loans being secured against it) or that the club appears unable to trade profitably without player sales/ reductions to balance the books.

Of course, what I have just said is my personal opinion and not that of my fellow colleagues trying to set up the trust. What is fact though is the amount of the club’s shares traded. You can take a look for yourselves at and you will see that over the last two weeks 13,709 shares have been traded, now that it hardly takeover activity.

In summary, I don’t think a takeover is in the offing but nothing surprises me when City are involved! By the way, I won't be investigating every rumour because most of the time they are just that rumours.


At 11:17 pm, Blogger TheGOS said...

I hope this rumour isn't true - it will merely facilitate another Eastern bloc gunrunner's money laundering activities.


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