ALK Capital or Farnell/Elkashashy takeover

[Devils_Advocate]

Show me another current Premier Leauge manager who has made as much profit or player value increase on a percentage basis on their overall purchases?

Depends what you think is best value for your club.

Sign a player for £15m and turn him into a £25m player and get that level of quality followed by £10m profit. Alternatively sign a player for £3m and turn him into a £9m plaster and get that level of quality followed by £6m profit

One scenario gives you a 300% profit and one gives you 66% profit and I know which one I'd prefer

[scouseclaret]

Someone mentions Northern Powerhouse and isn’t instantly derided...

?

Don’t believe I’ve shifted my opinion...

[Myk]

Depends what you think is best value for your club.

Sign a player for £15m and turn him into a £25m player and get that level of quality followed by £10m profit. Alternatively sign a player for £3m and turn him into a £9m plaster and get that level of quality followed by £6m profit

One scenario gives you a 300% profit and one gives you 66% profit and I know which one I'd prefer

Would be a massive wage difference too most likely.

[Devils_Advocate]

Would be a massive wage difference too most likely.

Yes teams should approach in what way best suits them and their finances but I was highlighting that looking at percentage profit can be misleading and not necessarily the best measure.

We would lose money spending £15m on a player who flopped than we would buying a team full of Dale Stephens but only one of those would be a sensible option for trying to keep us in this Division

[GodIsADeeJay81]

Depends what you think is best value for your club.

Sign a player for £15m and turn him into a £25m player and get that level of quality followed by £10m profit. Alternatively sign a player for £3m and turn him into a £9m plaster and get that level of quality followed by £6m profit

One scenario gives you a 300% profit and one gives you 66% profit and I know which one I'd prefer

Can't believe you didn't use Michael Keane purchase and sale prices just to hammer home that point

[dsr]

it still astounds me every time I read that, such a shame it really is that some of the unity has gone

The one thing Garlick has done that helps maintain unity on the playing front at least, is keep his mouth shut. With Dyche chipping away at every opportunity (I think he's in the wrong there), if Garlick had ever chosen to reply then the public row would give a greater reason for people to take sides. By keeping abslutely stumm, he has at least made it easier to keep the squad unity, even if the admin staff are pulling in all directions.

[Wokingclaret]

He hasn't though has he, remind me what he said at the start of the transfer window

And got his CEO to talk about it when it shut

[joey13]

He hasn't though has he, remind me what he said at the start of the transfer window

And got his CEO to talk about it when it shut

Exactly this

[aggi]

I've no idea how it will affect shareholders. I think being in the Premier League has increased the value of my shares for what it's worth but I don't think any of us can say how this will affect us, I've not had any notification as a shareholder. But as I've said previously, they might just be buying Garlick's shares and one other directors and that would take them over 50%.

Realistically the little shareholdings aren't really worth much as they're not enough to give any element of control.

Buying 90% is the magic number where current shareholders can force the people buying to also buy their shares (and the people buying can force existing shareholders to sell).

[ClaretTony]

Realistically the little shareholdings aren't really worth much as they're not enough to give any element of control.

Buying 90% is the magic number where current shareholders can force the people buying to also buy their shares (and the people buying can force existing shareholders to sell).

Thanks for that. I knew there was a point at which you would be forced to sell. I suspect they will fall short of that figure.

[scouseclaret]

Realistically the little shareholdings aren't really worth much as they're not enough to give any element of control.

Buying 90% is the magic number where current shareholders can force the people buying to also buy their shares (and the people buying can force existing shareholders to sell).

If an buyer acquires more than 90% of a company they have the right to compulsorily buy out the minorities. Up to that point, they cannot force you to sell, but once they have achieved a controlling interest, they are legally obliged to make the same offer to all shareholders - no need to wait for them to hit 90%.

[BurnleyFC]

Depends what you think is best value for your club.

Sign a player for £15m and turn him into a £25m player and get that level of quality followed by £10m profit. Alternatively sign a player for £3m and turn him into a £9m plaster and get that level of quality followed by £6m profit

One scenario gives you a 300% profit and one gives you 66% profit and I know which one I'd prefer

I get your point, but your maths is wrong.

[Devils_Advocate]

I get your point, but your maths is wrong.

Yes good spot, should have been 200% not 300% profit % I guess. So much for my Maths skills!

Edit: And 150% instead of 66% so miles out

[aggi]

If an buyer acquires more than 90% of a company they have the right to compulsorily buy out the minorities. Up to that point, they cannot force you to sell, but once they have achieved a controlling interest, they are legally obliged to make the same offer to all shareholders - no need to wait for them to hit 90%.

I'm pretty sure that there's a 90% threshold under the sell-out provisions unless the initial offer was to buy all shares (which isn't the case here I'm assuming).

[BurnleyFC]

Yes good spot, should have been 200% not 300% profit % I guess. So much for my Maths skills!

Edit: And 150% instead of 66% so miles out

Try again

You were correct with 200% and 66%.

[Devils_Advocate]

Try again

You were correct with 200% and 66%.

I give up, I spent too long looking at that sodding chess puzzle today

[TVC15]

Alternatively sign a player for £3m and turn him into a £9m plaster and get that level of quality followed by £6m profit

Sticky plaster ?

[Paul Waine]

Thanks for that. I knew there was a point at which you would be forced to sell. I suspect they will fall short of that figure.

Hi CT, why do you think that ALK will "fall short" of buying >90% of the shares? Do you think there are any larger shareholders who will choose to hold on to their shares if/when MG and JB sell their shares to ALK?

I'm sure all the current directors will understand the situation of shareholders. If additional funding is required by the club, for example, to invest in the playing staff, both through transfer activity and wages, then this funding could be raised by a rights issue - i.e. offering all shareholders the opportunity to subscribe for more shares. Any shareholders that "pass" on the rights issue will find that they will be diluted and own a smaller percentage of the total shares than they did before the rights issue. It may then be that ALK ends up with more than 90% after a rights issue and at that stage is able to "force through" the purchase of all the remaining independent shareholders' shares - if that is their aim. (All this, of course, without direct knowledge of the Memorandum and Articles specific to Burnley FC shareholder provisions).

Exciting times.

UTC

[aggi]

Hi CT, why do you think that ALK will "fall short" of buying >90% of the shares? Do you think there are any larger shareholders who will choose to hold on to their shares if/when MG and JB sell their shares to ALK?

I'm sure all the current directors will understand the situation of shareholders. If additional funding is required by the club, for example, to invest in the playing staff, both through transfer activity and wages, then this funding could be raised by a rights issue - i.e. offering all shareholders the opportunity to subscribe for more shares. Any shareholders that "pass" on the rights issue will find that they will be diluted and own a smaller percentage of the total shares than they did before the rights issue. It may then be that ALK ends up with more than 90% after a rights issue and at that stage is able to "force through" the purchase of all the remaining independent shareholders' shares - if that is their aim. (All this, of course, without direct knowledge of the Memorandum and Articles specific to Burnley FC shareholder provisions).

Exciting times.

UTC

I''ve not read the relevant section of the Companies Act in a while but I don't think a rights issue triggers the squeeze out provisions, only share purchases.

[CharlieinNewMexico]

Can’t understand the northern powerhouse thing. I live in New Mexico and El Paso (Texas) and Juarez (Mexico) are 30 miles East. I would think nothing of popping over for a gallon of milk if my city ran out, or going over for a night on the town.

But there’s no way in Burnley I’d drive to Salford for the same thing? Yes it’s still the same 30 miles but it definitely seems like 2 completely different areas culturally.

[Woodleyclaret]

FAO Charlie yes the two places are miles apart but you've got more chance of being mugged in Salford

[karatekid]

I’ve just googled El Paso and I must admit I am disappointed. I was hoping to find tumbleweed and saloon bars with a wood rail outside to tether the horses.
Instead I found a modern city with high rises and motor cars. Damn.

[arise_sir_charge]

In my opinion it would be pretty shoddy of Mike Garlick and John B to sell their own shares with little regard for the smaller shareholders, essentially making their investments worthless.

Most of those people will be lifelong fans that bought shares when the club needed it most.

Any deal should see everyone catered for in my opinion.

[Cheshireclaret]

I’ve just googled El Paso and I must admit I am disappointed. I was hoping to find tumbleweed and saloon bars with a wood rail outside to tether the horses.
Instead I found a modern city with high rises and motor cars. Damn.

Fantastic fajitas, burritos, enchiladas etc. in the old town though. I regularly follow their traditional recipes.......

[Paul Waine]

In my opinion it would be pretty shoddy of Mike Garlick and John B to sell their own shares with little regard for the smaller shareholders, essentially making their investments worthless.

Most of those people will be lifelong fans that bought shares when the club needed it most.

Any deal should see everyone catered for in my opinion.

Hi arise_sir_charge, MG and JB, as the club's biggest shareholders and directors are looking to sell the club. ALK are looking to buy the club. There's nothing shoddy going on.

If/when a deal is agreed all shareholders will have the opportunity to sell their shares to ALK on exactly the same terms as MG and JB. All the lifelong fans will get the same rewards for being shareholders.

There may be some shareholders (based on a few posts on here) who choose not to sell. If they can do that and ALK/club can't force them to sell that will be the only situation when their investment will be of limited value.

As before, I know nothing about these takeover negotiations other than the media reports and the club's statement. Also, I'm not a shareholder.

Exciting times.

UTC

[randomclaret2]

In my opinion it would be pretty shoddy of Mike Garlick and John B to sell their own shares with little regard for the smaller shareholders, essentially making their investments worthless.

Most of those people will be lifelong fans that bought shares when the club needed it most.

Any deal should see everyone catered for in my opinion.

Unhappy that shares now appear to be worth c.£1500 ??

[arise_sir_charge]

Hi arise_sir_charge, MG and JB, as the club's biggest shareholders and directors are looking to sell the club. ALK are looking to buy the club. There's nothing shoddy going on.

If/when a deal is agreed all shareholders will have the opportunity to sell their shares to ALK on exactly the same terms as MG and JB. All the lifelong fans will get the same rewards for being shareholders.

There may be some shareholders (based on a few posts on here) who choose not to sell. If they can do that and ALK/club can't force them to sell that will be the only situation when their investment will be of limited value.

As before, I know nothing about these takeover negotiations other than the media reports and the club's statement. Also, I'm not a shareholder.

Exciting times.

UTC

If that’s right in that ALK have to offer the same deal to all shareholders then fair enough. The inferences in some posts appear to be that ALK are only buying the shares of MG And JB.

In response to Random, they are only worth £1,500 if someone (ALK) are prepared to pay that for them. If Paul Waine is right in his explanation of what will happen then that is fair enough.

[Bigvince]

I wouldn’t think ALK would be too happy, pumping money into Burnley after a takeover. And increasing the value of all the shares, especially when all the shareholders aren’t contributing anything

[Paul Waine]

I wouldn’t think ALK would be too happy, pumping money into Burnley after a takeover. And increasing the value of all the shares, especially when all the shareholders aren’t contributing anything

MG and JB aren't negotiating the sale of their shares, they are negotiating the sale of all the shares. They are doing this as directors of the club.

There are rules with publicly quoted companies that require a new owner to offer to buy all there shares from all the small shareholders. I'm unsure of the rules for BFC, as it is a private limited company. However, all Burnley shareholders will have access to their company's shareholder rules and can check on the specific rules that apply to their shareholding. (I'm not a shareholder, so I can't do this).

Yes, part of buying the club is offering to buy out all shareholders, including those who only own 1 share. There may be rules that allow a shareholder to say "no thanks, I don't want to sell my share" and turn down the offer from ALK. Equally, I don't know why anyone would do this. It won't make their shareholding more valuable if they retain their ownership. Equally, it won't do anything for the club's finances, unless they are prepared to put in the same new money as ALK will be putting into the club.

Exciting times.

UTC

[CaptainKirk]

Can I be the first to say, exciting times!

[Bigvince]

Hi Paul thanks for the clarification

[icu81b4]

I wonder if ALK will reinstate the shareholders annual meeting !

[ClaretTony]

MG and JB aren't negotiating the sale of their shares, they are negotiating the sale of all the shares. They are doing this as directors of the club.

Are you certain of that?

[aggi]

MG and JB aren't negotiating the sale of their shares, they are negotiating the sale of all the shares. They are doing this as directors of the club.

I don't think this is the case, certainly not formally. For it to be a takeover offer for all shares then all shareholders must be notified which clearly isn't the case here. There are options, where contacting shareholders isn't feasible, to publish the details in the London Gazette but a quick search doesn't show anything there.

[TVC15]

MG and JB aren't negotiating the sale of their shares, they are negotiating the sale of all the shares. They are doing this as directors of the club.

I don’t think there is enough information on the structure of the takeover to know whether this is the case or not.
Not as far as I’m aware anyway.

We do know from the existing shareholder ownership that they don’t have to buy out all the shareholders to take a controlling interest of the club.

[Paul Waine]

I don't think this is the case, certainly not formally. For it to be a takeover offer for all shares then all shareholders must be notified which clearly isn't the case here. There are options, where contacting shareholders isn't feasible, to publish the details in the London Gazette but a quick search doesn't show anything there.

Are you certain of that?

1) The media reports speak of ALK Capital offering £200 million to buy the club. They don't say £200 million to buy MG and JB shares only;
2) The recent reports in the media, including Reuters, all appear to be the result of ALK issuing a press release, which prompted the reports;
3) Does anyone think it "makes sense" for ALK to limit the purchase to just MG's and JB's shares?
4) There will come a stage in the process when the Burnley board of directors will report on the offer from ALK to all shareholders, with their recommendation to accept the offer. The process hasn't reached that stage, just yet. I expect ALK being approved by Premier League ODT will be completed before that stage is reached.
5) I'd expect the directors will say something along the lines of: Burnley have received an offer from ALK - the directors consider this offer is "fair" and acceptance of this offer is in the best interest of Burnley football club and all shareholders. It will say MG and JB (and maybe other directors) have already accepted the offer and have transferred their shares to ALK. It will say the directors recommend all (small) shareholders do the same - and arrangements to do so will be as follows XXXXXXXXXX. This is all in accordance with BFC Shareholders Articles and Memorandum of Association and in accordance with Companies Act....

As I have said before, I repeat I have no direct knowledge of the negotiations re the takeover of Burnley FC. I only know what is reported in the media plus Neil Hart's statement as CEO of BFC. I am not a shareholder of Burnley FC.

I wish all Clarets fans and all BFC shareholders the very best wishes of the season. "Happy holidays" as many in America would say.

It's beginning to feel a lot like Christmas.... (though, personally I'm in South West London in Tier 4).

Exciting times.

UTC

[ClaretTony]

1) The media reports speak of ALK Capital offering £200 million to buy the club. They don't say £200 million to buy MG and JB shares only;
2) The recent reports in the media, including Reuters, all appear to be the result of ALK issuing a press release, which prompted the reports;
3) Does anyone think it "makes sense" for ALK to limit the purchase to just MG's and JB's shares?
4) There will come a stage in the process when the Burnley board of directors will report on the offer from ALK to all shareholders, with their recommendation to accept the offer. The process hasn't reached that stage, just yet. I expect ALK being approved by Premier League ODT will be completed before that stage is reached.
5) I'd expect the directors will say something along the lines of: Burnley have received an offer from ALK - the directors consider this offer is "fair" and acceptance of this offer is in the best interest of Burnley football club and all shareholders. It will say MG and JB (and maybe other directors) have already accepted the offer and have transferred their shares to ALK. It will say the directors recommend all (small) shareholders do the same - and arrangements to do so will be as follows XXXXXXXXXX. This is all in accordance with BFC Shareholders Articles and Memorandum of Association and in accordance with Companies Act....

As I have said before, I repeat I have no direct knowledge of the negotiations re the takeover of Burnley FC. I only know what is reported in the media plus Neil Hart's statement as CEO of BFC. I am not a shareholder of Burnley FC.

I wish all Clarets fans and all BFC shareholders the very best wishes of the season. "Happy holidays" as many in America would say.

It's beginning to feel a lot like Christmas.... (though, personally I'm in South West London in Tier 4).

Exciting times.

UTC

I don’t believe ALK have issued any press release. I don’t think what you are suggesting is necessarily correct.

[scouseclaret]

“I don't think this is the case, certainly not formally. For it to be a takeover offer for all shares then all shareholders must be notified which clearly isn't the case here. There are options, where contacting shareholders isn't feasible, to publish the details in the London Gazette but a quick search doesn't show anything there.”

I’ve said before, it is the responsibility of the directors to negotiate the sale of a company, not the shareholders. Once an agreement is reached, they will make a formal recommendation to the shareholders to accept the offer. Until then, there is no need to formally approach all shareholders.

As PW said, with PLCs there is a obligation to treat all shareholders equally regardless of how large their holding, so everyone gets the same price per share. There seems to be a difference of opinion between PW and Aggi as to whether similar rules apply to private companies - I’m not sure either.

A word of warning though, if there is no such obligation, whether or not minority shareholders get paid out will be purely a matter of goodwill on the part of ALK. There’s no practical reason why they would need to do so, particular since holders below a certain level can’t vote.

[icu81b4]

I’d expect a new press release to be issued on their website once a deal is completed along with the ones already on there.

It’s easier than trawling through this thread, although not quite as entertaining.

[aggi]

For what it's worth I think ALK would be looking to purchase as many shares as possible. One of their routes to profit will be the exit after increasing the value of the club and obviously the more shares the more profit.

I just don't think it's a fait accompli as others have suggested and there are routes to a controlling interest without buying all shares so long as you obtain Garlick's shares.

[Paul Waine]

I don’t believe ALK have issued any press release. I don’t think what you are suggesting is necessarily correct.

No worries, CT. Just my personal views and a little bit of experience in other (non-football) areas. I may not be interpreting everything right. There may be facts which I'm not aware of.

UTC

[dibraidio]

My understanding is that they're buying the club as an investment and not as something to invest in. I expect them to work at improving our commercial income considerably and I'd be surprised if they're not expecting to sign a deal with a major global sponsor for the shirts and Turf Moor like Brighton have in Amex and Arsenal have in Emirates.

If I decide to keep my shares (and I'm allowed) I wouldn't expect them to be asking me to put my hand in my pocket however if profits are made and they want to take money out I'd expect that to be done on a dividend basis.

If ALK are offering 200m for all of the 122,478 shares that's £1632.95 per share.

If the club pay out 5 million in dividends that would be £40.82 per share. It would take you 40 years to get the same money that they're supposedly offering today from 5 million worth of dividends per year. That's just an example of course but I wouldn't expect them to be planning on recouping less than 2.5% a year on their investment.

[Paul Waine]

My understanding is that they're buying the club as an investment and not as something to invest in. I expect them to work at improving our commercial income considerably and I'd be surprised if they're not expecting to sign a deal with a major global sponsor for the shirts and Turf Moor like Brighton have in Amex and Arsenal have in Emirates.

If I decide to keep my shares (and I'm allowed) I wouldn't expect them to be asking me to put my hand in my pocket however if profits are made and they want to take money out I'd expect that to be done on a dividend basis.

If ALK are offering 200m for all of the 122,478 shares that's £1632.95 per share.

If the club pay out 5 million in dividends that would be £40.82 per share. It would take you 40 years to get the same money that they're supposedly offering today from 5 million worth of dividends per year. That's just an example of course but I wouldn't expect them to be planning on recouping less than 2.5% a year on their investment.

Interesting, dibraidio.

My views - and others may agree or may not with some/all of this: the club needs money to sign new players and the club needs money to pay wages to attract (and retain) Premier League class players and, of course, needs money to keep the best coaching staff, including Sean Dyche.

This money needs to come from somewhere - and will need to be "paid for."

The club won't make money in the first few years of new ownership - but, it will have to make money.

There's a lot of risk in owning a Premier League football club, as there is in any business.

I'd expect the target return for the £200 million, plus additional funds spent, as above, is of the order of 15-20%. 2.5% doesn't justify the risks involved. I'd expect the aim is to make this return from the appreciation in value of Premier League "soccer" teams - in the same way that US sports franchises have risen in value in recent years. (Note, this isn't saying that ALK are thinking of BFC as a sports franchise. They will have done their due diligence and understand that Premier League football does not operate a franchise club structure).

We know Alan Pace is "fronting" ALK Capital. It will be interesting when we know more about where the money is coming from behind ALK.

Exciting times.

UTC

[aggi]

My understanding is that they're buying the club as an investment and not as something to invest in. I expect them to work at improving our commercial income considerably and I'd be surprised if they're not expecting to sign a deal with a major global sponsor for the shirts and Turf Moor like Brighton have in Amex and Arsenal have in Emirates.

If I decide to keep my shares (and I'm allowed) I wouldn't expect them to be asking me to put my hand in my pocket however if profits are made and they want to take money out I'd expect that to be done on a dividend basis.

If ALK are offering 200m for all of the 122,478 shares that's £1632.95 per share.

If the club pay out 5 million in dividends that would be £40.82 per share. It would take you 40 years to get the same money that they're supposedly offering today from 5 million worth of dividends per year. That's just an example of course but I wouldn't expect them to be planning on recouping less than 2.5% a year on their investment.

I would be very surprised if dividends of £5m a year were paid at any time in the near future. Firstly, it's likely priority would probably be to reinvest surplus profits and secondly I'd expect management fees and paid directors as the first route rather than dividends. (Also, as above, I believe their route for significant profits would be selling the club.)

[dibraidio]

I would be very surprised if dividends of £5m a year were paid at any time in the near future. Firstly, it's likely priority would probably be to reinvest surplus profits and secondly I'd expect management fees and paid directors as the first route rather than dividends. (Also, as above, I believe their route for significant profits would be selling the club.)

So what your saying aggi is that the small shareholders will get diddley so keeping hold of your shares is a waste of time except for sentimental value.
That was more or less the point of my dividend example if the offer is on the table we'd be best off accepting it.

I can see that a management fee from an external company might be the way that they intend to repay their investors but paid directors isn't going to give anything back to the backers of ALK. If they do pay management fees then I really hope that it's not done via an offshore company like the Starbucks of this world.

[DCWat]

For what it's worth I think ALK would be looking to purchase as many shares as possible. One of their routes to profit will be the exit after increasing the value of the club and obviously the more shares the more profit.

I just don't think it's a fait accompli as others have suggested and there are routes to a controlling interest without buying all shares so long as you obtain Garlick's shares.

And there is the longer term concern. ALK may well turn out to be great owners but if and when they come to sell, profit is the key focus, we could be left with owners that are far less reputable.

[NewClaret]

In my experience, ALK will want to buy all shares, but that could be something they “tidy up” after gaining a controlling stake and/or any funds held in escrow based on future performance have been paid/returned. It’s not something they have to worry about during the takeover (unless they want to complicate matters).

[bfcwest]

I've said a few times before, it all depends what is written in the articles of BFC Co. If they have a 'drag and tag' clause inserted (which is likely), then ALK only need to agree the deal with 50.1% of the shareholders (e.g. Garlick plus a.n. other), and this would trigger the clause that means:
a) ALK can buy out ALL shares at that price (The Drag).
b) ALL shareholders are entitled to sell at that price even if ALK don't want to buy them (The Tag).

I am almost certain that ALK will buy 100% of shares. It just doesn't make sense for them to only buy some and not all.

[aggi]

I've said a few times before, it all depends what is written in the articles of BFC Co. If they have a 'drag and tag' clause inserted (which is likely), then ALK only need to agree the deal with 50.1% of the shareholders (e.g. Garlick plus a.n. other), and this would trigger the clause that means:
a) ALK can buy out ALL shares at that price (The Drag).
b) ALL shareholders are entitled to sell at that price even if ALK don't want to buy them (The Tag).

I am almost certain that ALK will buy 100% of shares. It just doesn't make sense for them to only buy some and not all.

There's nothing obvious in the Articles relating to this.

[aggi]

So what your saying aggi is that the small shareholders will get diddley so keeping hold of your shares is a waste of time except for sentimental value.
That was more or less the point of my dividend example if the offer is on the table we'd be best off accepting it.

I can see that a management fee from an external company might be the way that they intend to repay their investors but paid directors isn't going to give anything back to the backers of ALK. If they do pay management fees then I really hope that it's not done via an offshore company like the Starbucks of this world.

Small shareholdings in private companies are generally fairly worthless unless there is some kind of exit strategy such as floatation. I would suspect that the majority of BFC's small shareholders have their shares for sentimental reasons.