Man United IPO price less than expected
The club said its shares priced at $14 apiece, below the $16-$20 per share range it had in mind. At the high end of the range, the team would have been valued at $3.3 billion.
The club priced 16.7 million shares, as planned, and raised $233.2 million - which will be split equally between it and its owners, the Florida-based Glazer family.
The loss of as much as $50 million proceeds for the club will be a blow as it copes with a heavy debt burden and seeks to buy new players, who cost tens of millions of dollars each.
While the deal still makes it the largest sports-team IPO on record, the valuation is a setback for the 134-year-old club, which had to abort plans for an offering in Singapore and then saw Morgan Stanley leave the underwriting syndicate partly due to disagreements over valuation.
Investors, bankers and analysts have said the U.S. IPO range represented an exceptionally rich valuation. One analyst said shareholders were paying up even at the IPO price.
"I'm surprised it wasn't more of a discount," said Ken Perkins, an analyst with Morningstar. "Our value was around $10. It's still a rich price. They're asking people to pay up a lot to take on a lot of operational and financial risk."
The Glazers, whose interests include shopping centers and the Tampa Bay Buccaneers football team, will also take in less money from the share sale, but the deal still represents a return of some 2.5 times their equity investment in the club.
The club is planning to use the money to pay down its pile of debt that dates back to the Glazers' 790 million pounds leveraged buyout in 2005. Manchester United's debt load stood at over 437 million pounds as of June 30.
Some fans of the team have protested the IPO, criticising the Glazers for only using half of the deal's proceeds to pay down debt. They argue that this hefty debt load has led to reduced financial flexibility which came at the expense of investment in players and the team's performance.
Buying players can be expensive.
The club, for example, is trying to sign Dutch international striker Robin van Persie from Premier League rivals Arsenal.
Manchester United will start trading on Friday on the New York Stock Exchange under the ticker "MANU", with the team's management expected to ring the opening bell at the exchange.
The deal tops off a mixed week for U.S. IPOs. Restaurant operator CKE Inc postponed its offering on Thursday, citing market conditions.
Earlier this week, Outback Steakhouse operator Bloomin' Brands Inc raised $176 million, selling fewer shares than expected and pricing below the expected range. Peregrine Semiconductor Corp raised $77 million, pricing shares at the low end of its expected $14 to $16 range.
The underwriters for Manchester United's IPO, who were led by Jefferies Group Inc, sought to pitch the club to potential investors not as a sports franchise but as a global consumer brand.