Manchester United (NYSE:
) raised $233 million in its much anticipated IPO as the club sold
shares on the New York Stock Exchange. This made Manchester United
the first English football club to list on an American exchange.
After expenses, Manchester United accrued $110.3 million in the
In an SEC filing, Manchester United stated, "We will use all of
our net proceeds from this offering to reduce indebtedness by
exercising our option to redeem and retire $101.7 million in
aggregate principal amount of our 8.375 percent U.S. dollar senior
secured notes due 2017 at a redemption price equal to 108.375
percent of the principal amount of such notes, plus accrued and
unpaid interest to the date of such redemption."
Investors in the U.S. may be unsure on how to trade a football
club, as it is a new type of company to list in the US. Investors
may want to watch the first team's performance. Manchester United
opens its season on Sunday, August 12 in the Football Associations
Community Shield match against cross-town and bitter rivals
Manchester City. City, the defending Premier League champions, will
be looking to make a quick start to the season and the match will
likely be great publicity for both clubs.
By playing in high profile games early in the season, Manchester
United will probably reap extra television rights revenue and boost
its top line. Manchester United then opens up its Barclays (NYSE:
) Premier League season on August 20 against Everton FC. The
September 23 match against Liverpool FC, owned by the Fenway Sports
Group, should be the club's first real test and pits decade-long
rivals against each other in a match at the historic Anfield
grounds in Liverpool.
Investors may also want to watch the signings that the club
makes. In football, the signing of new players is called transfers,
not just free agents, because clubs can actually buy the contract
of another club's player out and then sign them. For example,
Manchester United recently bought Shinji Kagawa, one of Japan's
best players at the moment from German outfit Borussia Dortmund for
a minimum fee of $26.5 million, depending on performance and other
Manchester United priced its shares below the expected range of
$16-20, but this was not due to weak demand. Rather, this lower
pricing was likely intended to price the stock fairly and allow
fans and investors to have a full take up. With lots of debt on its
balance sheet, some equity researchers have expressed a view that
the stock is still overpriced at $14. For example, Morningstar said
it believes that the fair value of the stock is $10.
During the first day of trading, shares never fell below $14 and
held within a five cent range. According to
, the company overestimated the support shares would receive after
market open. Finance professor Tim Jenkinson of the University of
Oxford said, "It's surprising to me that they got it away given the
structure. The ownership structure seems inappropriate to me for
this sort of company. I don't see much in it for the outside
investor who has no control." Reuters also reported that it
expected a $50 million loss in proceeds for the club due to these
factors, as Manchester United is the first sports club stock to go
public in about a decade.
Manchester United shares opened for trading higher from the IPO
price at $14.05 per share and have settled to $14 at the time of
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