Chelsea 'could face share inquiry'

Chelsea are one of England's most successful clubs

Movements in Chelsea football club's share price ahead of the surprise takeover deal could be investigated by financial watchdogs, City sources have said.

Share price movements often come under scrutiny when takeovers are announced, and Chelsea Village - the company that owns the football club - saw its shares rise eight pence, or 40%, to 28p between 13 June and Tuesday evening's announcement.

Rising share prices can arouse suspicion, although there is no suggestion of insider trading among the main parties to the deal.

Chelsea stunned football supporters and investors by announcing that it had agreed to a £140m ($233m) takeover by Russian oil and metals tycoon Roman Abramovich.

Roman Abramovich speaks to BBC Business Editor Jeff Randall

Under the deal, Mr Abramovich, a 36-year-old entrepreneur worth an estimated £3.8bn, will pay about £30m in cash for half the club's shares, and a further £80m to cover its debts.

He intends to buy the remaining shares in due course and is expected to write to shareholders in the next few days, offering them 35 pence a share - or about another £30m - for their holdings.

The Russian billionaire, who has no other known football investments, has also signalled that he will use his wealth to help the club realise its "huge" potential.

Price movements

Shares in Chelsea Village rose 12p to 40p in early trading on Wednesday before slipping back to close at 35p.

The London Stock Exchange (LSE) said it did not comment on whether it was investigating specific companies.

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"We cannot comment on individual cases, but we monitor our markets very closely for unusual share price movements," an LSE spokesman said.

"If we thought there was a cause for concern, we would refer the matter to the Financial Services Authority (FSA) who have statutory powers of investigation."

Fan caution

Some Chelsea fans have voiced misgivings over the club's surprise takeover by Mr Abramovich, although most have welcomed his promise of financial support.

"It's a bit early to say," said Cliff Lee, secretary of the Hastings Chelsea supporters' club.

"New blood might bring new ideas, but I'd be happier if the buyer was Spanish or Italian with a track record in football, rather than someone who made his money selling aluminium."

Friend or foe?

John Russell of the Chelsea Central supporters' club agreed that Mr Abramovich was an "unknown factor".

"But on the surface, someone offering to bankroll the club and help it sustain its performance is a godsend."

Jez Walters of unofficial Chelsea supporters' website CFCNet said: "I'm more optimistic than average.

"We have wiped out our debts with an economic downturn just about to happen. We needed this, or we could have gone the way of Leeds very quickly."

Doubts over Mr Abramovich's intentions were voiced by former sports minister and Chelsea fan Tony Banks, who on Tuesday said the deal should be halted pending a government probe into the Russian tycoon's credentials.

"I want to know whether this individual is a fit and proper person to be taking over a club like Chelsea," Mr Banks told the BBC.

"A sale has been arranged to an individual we know nothing about."

City cheers

Some fans feared that the club, weighed down by the cost of developing its Chelsea Village hotel and leisure complex, might have been unable to pay for new talent needed to sustain its strong performance on the pitch.

Chelsea, like many other British football clubs, has also been struggling in the face of a weaker player transfer market and the prospect of a decline in television broadcast revenues next season.

The takeover - the biggest in British football history - was finalised late on Tuesday after talks with chairman Ken Bates.

Mr Bates, who is expected to stay on as chairman, is credited with transforming Chelsea from a financial and footballing basket case to a leading force in the English game after buying it for a nominal £1 in 1982.