United fans' game plan is not a winner
If Malcolm Glazer can borrow up to his eyeballs, why not Manchester United's fans? In the form of the admirable Shareholders United group, they plan to establish a leveraged investment trust to buy shares in the football club with cash borrowed from Japanese investment bank Nomura.
The ambition is to build a 25% stake, sufficient to block Glazer or any other bidder. We hate to throw cold water on an innovative idea, but this does not look like salvation.
For a start, it has emerged very late in the day. Glazer could (finally) make his move next week, whereas SU and Nomura have not even agreed terms. But if the loan is even remotely commercial, it could not be serviced from dividends on United's low-yielding shares.
So what would United fans be getting by swapping their shares for units in the proposed investment trust? They would lose direct control over their holding, which the trust would use instead as security to borrow up to £100m from Nomura.
SU sees this as a way for shareholder-fans to get "twice the bang for your buck", but leverage cuts both ways. If the trust defaulted, the shares would end up in Nomura's hands.
A question must also be asked about where the trust would hope to acquire shares. Glazer, with 28.8%, is obviously a non-seller, and it is hard to see what is in it for JP McManus and John Magnier.
The trust would not want all their 29% stake, or even a majority of it. So if the scheme succeeded, the Irishmen would be left with an illiquid investment in a bid-proof company.
The threat of takeover has been apparent to United fans since BSkyB's bid in 1998. The obvious response then would have been a popular share-buying programme, especially when the price dived towards 100p. It happened then (in a very modest way), but it probably won't now, however imaginatively it is dressed up.
Marks for arrogance
French Connection's management will this morning face its shareholders and they can expect a bumpy ride.
The shares have halved in the last twelve months - although lucky fcuk boss Stephen Marks cashed in £40m of his holding just below the peak - and the chain's most recent sales figures (down 17% in February and early March) were a disaster area.
At today's annual meeting, though, corporate governance - or fcuk's lack of it - will be on the agenda. Investors often turn a blind eye to boardroom practice when shares are heading north. But if growth stalls and the stock suffers, priorities change. At French Connection - a company which is probably better described as Stephen Marks plc - corporate governance simply doesn't exist. Marks is both chairman and chief executive, with no service contract. There is just one non-executive. There is no standing audit committee, remuneration committee or nominations committee.
The roles of finance director and company secretary are combined. Board pay is set by Mr Marks, and then approved by the full board - which is made up of Mr Marks, two executives and the one non-executive. The company does not disclose the maximum bonuses that individual directors can earn. (Last year profits declined but bonuses of up to 91% were paid).
All of the above contravene best practice. Research Recommendations Electronic Voting, a venture involving the National Association of Pension Funds, says Mr Marks has "unfettered powers of decision". If Mr Marks wants to run a public company he should play by at least some of the rules. Instead he chooses to thumb his nose at them.
He reckons no one can care more about the interests of shareholders than him - because he owns 42% of the stock. A lorryload of shares and a lifetime of experience, however, still does not mean you have all the answers. Ask David Sainsbury, Tim Martin, Malcolm Walker, John Hargreaves ... we could go on. It is the logic of arrogance. So don't expect change.
Don't mention LSE
In the next day or so, the Competition Commission is scheduled to issue a charge sheet against the bidders for the London Stock Exchange.
Formally known as an issues statement, it begins the process by which Deutsche Börse and Euronext must con vince the watchdog that their bids will not impede competition for share trading. Both sides have already put in their submissions, but the publication of the formal document could not have come at a worse time for Werner Seifert, the embattled Deutsche Börse boss.
The last thing the hedge funds who control the Frankfurt exchange need reminding of is a possible LSE bid. They forced Seifert to abandoned his long-held ambition to control the London market and are demanding major boardroom changes at the upcoming annual meeting as the price for him trying (again).
With the agm barely 20 days away, Seifert will be hoping the first of a series of missives from the Competition Commission is barely noticed. The watchdog's other pronouncements - and there will be many before the scheduled outcome in September - may well be irrelevant unless Seifert can somehow win round his disgruntled owners.