Page last updated at 14:59 GMT, Thursday, 5 November 2009

What next for 'Silent Stan' at Arsenal?

By Bill Wilson
Business reporter, BBC News

Stan Kroenke at Arsenal
Mr Kroenke also owns a number of US sports clubs

US tycoon Stan Kroenke's steady acquisition of shares in Arsenal Football Club has observers wondering what his next move will be.

In a series of small but regular share purchases, Mr Kroenke has built up a stake approaching the point where he will be forced to make a formal takeover bid.

Will the businessman dubbed "Silent Stan" buy the few more Gunners' shares he needs to reach a 30% holding and launch a full-scale takeover? Or will he stick at his present 29.9% shareholding and sit on his investment?

Four players

"If Kroenke is not intending a takeover it may well be that he is buying shares as an investment asset. He might see it as good value," says Harry Philp, managing director at sports financers and advisers Hermes Sports Partners.

"There is a precedent for this latter approach; JP McManus and John Magnier built up stock in Manchester United close to the 30% mark and everyone thought they were going to take over, but they didn't, and made a good return on their investment when the Glazers took over."

As well as Mr Kroenke, the other major shareholders are Uzbeki tycoon Alisher Usmanov, who holds a stake of about 25%, Danny Fiszman, and Lady Bracewell-Smith.

Once someone reaches a 30% shareholding in a company they are deemed by the Takeover Panel to have "effective control" of the firm and must then make an offer for the remaining shares
The price offered cannot be lower than the highest price the offerer has paid for shares in the firm in the previous 12 months
If, after the offer has been made, the offerer has more than 50% of the shares they are deemed to have been successful in their takeover and legally in control
If an offer is unsuccessful and the 50% shareholding level is not breached then the offerer cannot come back with another takeover attempt for 12 months, unless invited to do so by the company

"There are these four big shareholders at Arsenal, and it is hard to predict what the intentions of each is, never mind Kroenke," says Mr Philp.

"Is there going to be a bidding war between Stan Kroenke and Alisher Usmanov? Danny Fiszman has sold shares to Kroenke previously, but then said in March he had no plans to sell any more.

"Meanwhile Lady Nina Bracewell-Smith is an unknown factor on the sidelines."

In his latest purchase, US billionaire Mr Kroenke bought another 427 shares in Arsenal's holding company, at a cost of £3.6m ($5.86m).

The Denver-based businessman bought the shares at £8,500 each, which - at that price - would value the club at about £529m. It would cost him about £370m to buy the remaining shares.

Long-running deals

"If Kroenke does go ahead he would have to pay completely in cash, as the days of using leverage to buy a football club is just not on the agenda at present," says Mr Philp.

"He will be weighing up the pros and cons of all the parts of the Arsenal business.

Robin van Persie and Abou Diaby
Matchday revenues at the Emirates have been boosting Arsenal's coffers

"There are good match day revenues, but the squad wages are higher than what they were a few years ago.

"The property side of the business is sluggish, but the stadium is an asset for bringing in revenue through things like conferences and events."

The club has two long-term commercial deals with the Emirates airline, which is shirt sponsor until 2014/15 and stadium-naming sponsor until 2020/21.

"The shirt and stadium sponsorship deals are tied in for a number of years, which eliminates them as a source of earning extra revenue in the immediate term," says Mr Philp.

"And, because they are also long-term deals, it means they bring in less cash value every year."

Fan reaction

At Arsenal's annual general meeting at the Emirates Stadium on 22 October, Mr Kroenke was asked what his intentions were for the north London club.

But he chose not to speak to the gathered shareholders, with chairman Peter Hill-Wood intervening.

Mr Hill-Wood pointed out that under takeover rules any public statements regarding future bid intentions must be unambiguous, otherwise the individual concerned would be prevented from making a formal takeover move for six months.

According to the Arsenal Supporters' Trust (AST), roughly 13% of the club's shares are held by small shareholders.

"While the AST welcome Stan Kroenke's involvement, we agree with the sentiment of Peter Hill-Wood's statement at the most recent AGM that there is no need for any shareholder to launch a takeover of the club," says the fans' body.

"If a takeover is launched by any party, we would seek urgent discussions with those involved," it adds.

However, the supporters' group concludes that in its view "a takeover is not imminent" and that Mr Kroenke's most recent purchase "is the consolidation of an existing position".

Mr Philp believes that before Mr Kroenke could go ahead with any takeover, he would have to be sure that Mr Usmanov was willing to sell his shares.

"That is the key to whether Kroenke gets control or not," he says.

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