Man Utd share value 'could plunge'
13 August 2012
Manchester United shares are worth less than a quarter of the amount the Glazers had hoped to raise, according a leading business company.
PrivCo, an independent financial analyst, said United's stock price could plummet further - and gave the shares a value that would mean the club is worth less now than when the Glazers bought it in 2005.
The Glazers floated 10% of shares in the club on the New York Stock Exchange on Friday, looking for a maximum price of $20 a share.
United's current share price is $14, but millions of shares have been bought by the seven banks underwriting the IPO, and PrivCo calculated their true value is just $4.97 each - giving United a value of around $800 million rather than the $3.3 billion the American family had wanted.
The Glazers paid just under £800 million to complete their takeover in 2005.
"Manchester United's valuation using several accurate valuation methodologies is a mere $4.97 a share, only about one-third of its $14 a share offering price (which is also the price at which it closed its first trading day, but only because IPO underwriters placed large open-market bids at $14 a share to prevent the stock from closing below the IPO price)," PrivCo said.
The company compared United with other publicly-listed football clubs including Juventus, Roma and Borussia Dortmund, and recent takeovers of other sports clubs or franchises, including Liverpool, LA Dodgers and Boston Celtics, and predicted that the club will emulate Facebook, whose share price also plunged quickly.
"The objective, independent valuation indicates that MANU stock could plunge by nearly two-thirds of its IPO price before it reaches fair value," PrivCo explained.
"Furthermore, PrivCo data shows the implications of other recent IPOs where IPO underwriters were forced to make 'stabilising bids' on the first day's trading correlated with rapid plunge in stock prices as soon as the ephemeral artificial floor propping up price in initial days is removed, and how this augurs poorly for Manchester United's public shareholders."