I hesitate to write another Arsenal share price post, because every time I do something seems to change within a day or two and make it out of date.
I talked about a new record price and the market-makers then raising the bid and ask prices a couple of times, and immediately another share was traded for yet another record of £36,000. Since writing this, two more shares sold for £37,000 each on March 22, 2018.
On the face of it this values Arsenal at £2.146bn, when the share price a year ago indicated a club overall value of just £1.06bn. Does this matter? Only if Kroenke or Usmanov plan to sell their shares. Even if they do, the record price of £37,000 per share may not have much bearing on what they agree between them.
Normally a takeover bid will be made at a premium to the prevailing share price, mainly to reduce opposition to the bid by allowing shareholders to cash out at a profit to what they’d expect in the normal run of business. However, given that so far only two shares have been sold for £37,000 and one at £36,000, with the record prior to that being £31,000, there’s nothing particular to indicate that £36,000 or higher is the ‘correct’ price.
There’s certainly no legal reason why either Kroenke or Usmanov needs to pay anyone £36,000 or £37,000 per share.
If Usmanov bought Kroenke’s stake, he could strike a deal with Kroenke at any price, with the only rule being that he’d have to offer other shareholders the same price.
If Kroenke buys Usmanov’s 30 per cent he’s obliged under the Takeover Code to offer all other shareholders at least the highest price he’s paid for shares in the last 12 months. At the moment that’s £28,000 since he bought 22 shares at that price at the end of January 2018. Even if Usmanov accepted an offer lower than that, Kroenke would still need to offer everyone else – the other 600-odd small shareholders – £28,000 per share.
Whichever way this deal went, one person would then have over 97 per cent of the shares, so could compulsorily buy out the rest of the shareholders and take Arsenal private for the first time in its history.
Of course, there’s nothing to suggest at present that either major shareholder has any intention of selling, never mind at a discount to either the prevailing market price or the highest price Kroenke has paid.
But certainly neither needs to go near the current record of £37,000, and the rest of the shareholders would have little choice but to accept whatever deal was made between the two of them.
Before January this year, Kroenke had not paid more than £16,000 for an Arsenal share. One theory is the only reason Stan bothered buying in January was to set a marker and make it more expensive for Usmanov to offer to buy him out. He wouldn’t want to set a higher marker if he was planning to buy out Usmanov.
I don’t believe either of them plans to sell at the moment, though for Usmanov there is one cloud on the horizon: UK Government plans to seize the ill-gotten assets of Russian and other former-Soviet oligarchs. Usmanov might suddenly become desperate to sell or might be forced to, or possibly have his shares seized pending investigation into the source of his fortune. Usmanov is close to Putin and has been named as a possible target for this sort of action. If Usmanov’s shares are either confiscated from him or he just needs to sell them, someone will need to buy them. That would be an easy win for Kroenke, assuming he wanted to stump up the necessary funds – he’d certainly be in pole position, and probably consider it too good an opportunity to miss. No one else is likely to want to spend several hundred million pounds on an asset that gives them no return and no infuence at the club.
Unless of course Labour get into power and Jeremy Corbyn decides to use Usmanov’s stake as a stepping stone to nationalise Arsenal…