This is the latest in my series of blogs on the subject of “What the hell is Alisher Usmanov up to?” I could ask him I suppose, but where’s the fun in that?
I’ve written several pieces on Arsenal ownership and in particular the effect of Alisher Usmanov on the ownership dynamic, and I like to think I’ve got a pretty good grasp of the situation. But there is one thing that puzzles me, because Mr Usmanov seems to think it’s important and I can’t work out why.
Red & White Holdings are adamant, and have repeated this week, that they haven’t paid more than £14,000 for any Arsenal share. So my question is this:
Why do R&W think it’s important that they don’t pay more than £14k per Arsenal share?
The most obvious answer is that when someone is attempting a company takeover, the Takeover Panel may force the purchaser to offer to all other shareholders the highest price they have paid for a share in the previous 12 months. So if R&W don’t pay more than £14k for a share they won’t be forced to pay more than £14k if/when they make a full bid. However, in practice in Arsenal’s situation this doesn’t make a blind bit of difference. With Stan Kroenke having 67% already, the Takeover Panel is highly unlikely to insist on R&W even making an offer, never mind at a particular price. The chances are so small, they’re probably only visible under a microscope.
Or maybe Usmanov just has a very firm idea of what Arsenal is worth. £14k a share times 62,219 gives a total of £871m, plus the debt, so about £1.1bn altogether. Maybe Usmanov has just decided that Arsenal isn’t worth more than that. Or perhaps that whatever happens he will not be giving Stan Kroenke more profit than that.
The problem with all these theories is that since the Arsenal share price went over £14k for the first time on 12 January this year, 87 shares have been sold on Plus Markets (and possibly many others off-market) for more than £14k, costing £1,338,400 in total.
So if R&W aren’t buying them, who is spending this money and why?
Basically there are two options: either the mysterious someone is in cahoots with Mr Usmanov or he isn’t. And either way, there’s nothing illegal about it. Mr Usmanov is perfectly entitled to be in cahoots with whomever he pleases. A stock market announcement has to be made whenever R&W’s shareholding in Arsenal goes over another full percentage point, but he hasn’t crossed one this year and adding 87 shares to the current R&W total won’t do it.
Arsenal are obliged to tell the Premier League when the holdings of major shareholders (ie above 10%) change, so R&W tell Arsenal how many shares they’ve got every couple of weeks, but don’t have to tell them how many their friends have got.
So if it’s not a friend of Mr Usmanov, what’s the motive for buying £1.3m of shares in six months that earn no interest or dividends and hold absolutely no power? Beats me. Finding 33 different sellers and negotiating with them seems a lot of effort for no apparent reward. Stranger things have happened, but it seems unlikely. It could conceivably be someone out to stop R&W from getting to 30 per cent, but that still wouldn’t explain why Usmanov was sticking to a £14k maximum. It’s not Stan, because he’d have to declare it, and it’s not likely to be a mate of his because a) that would be a bit pointless, and b) because Stan’s a director he’d be on dodgier legal ground if acting in concert with another party on the sly. (It’s not the Fanshare scheme either, though to be fair the scheme has bought a couple of shares at more than £14k so some of the figures I’m quoting do need a slight adjustment, but it makes no material difference to the argument.)
But if it is a friend of Mr U, what’s the motivation there? If it’s so that R&W can suddenly jump up at some point soon and shout, “A-ha! We said we only had 18,579 shares but in fact our mate had 87 and we’ve just bought them all from him so we have 18,666, which is 30 per cent! Show us the books Stan!” then even if they have a very understanding friend prepared to take a loss when passing the shares on for £14k each, the Takeover Panel is going to say, “Look pal, it’s obvious you were acting in concert all along and therefore if you, Alisher Usmanov, are making a bid for the whole company you have to offer the highest price your mate paid – we’re not daft, you know.”
So Mr U would have to stump up £700m for Stan’s 67 per cent instead of £584m (assuming the single share sold for the highest ever price of £16,800 was bought by Usmanov’s mate and not by some random loony).
So I don’t get it. I don’t see why AU is so determined to only spend £14k a share maximum, because it makes no difference to anything, and in fact he is making it harder for himself to reach 30 per cent! But it doesn’t save him money, it won’t change what the Takeover Panel say or do, it won’t change the value of Arsenal or Stan’s intentions to hold or sell. I’m baffled.
But you’re an intelligent sort of bloke, what do you think?
Add a comment or tweet me: @AngryOfN5
Since posting this piece Scott Meisel (@scottmeisel1) has come up with a theory:
- Usmanov is getting someone else to buy some shares and hold them for him, because there are people who won’t sell directly to him
- His self-imposed limit of £14k is just to throw people off the scent so they don’t suspect he is buying other shares as well
- His mate can buy from people who refuse to sell to Usmanov directly, and say “Of course it’s not for him, he never pays more than £14k, everyone knows that”
- That would explain why his people were so quick to jump up when Matt Scott of the Daily Telegraph mentioned this subject earlier this week – they were straight on the phone to him to say that they never buy above £14k
This theory seems to hold up. I am almost convinced.