* UK club's shares price at $14 vs $16-$20/shr range
* Deal represents 2.5 times equity return for Glazers
* Analyst says "surprised it wasn't more of a discount"
Aug 9 (Reuters) - Manchester United Ltd's initial
public offering priced well below its expected range on
Thursday, valuing the British soccer club at only $2.3 billion
and shaving off as much as $100 million from the anticipated
proceeds for the team and its owners.
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 ($1.2
billion) leveraged buyout in 2005. Manchester United's debt load
stood at over 437 million pounds ($682 million) as of June 30.
Some fans of the team have protested the IPO, criticizing
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.
Britain's Daily Mail reported on its website on Thursday that
Manchester United had bid 15 million pounds for van Persie.
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.
PRICEY DEAL
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.
Different banks in the syndicate used vastly different
comparisons for the club, ranging from media companies such as
Walt Disney Co, e-commerce companies like Amazon.com Inc
and branded consumer names similar to Michael Kors
Holdings Ltd, sources have previously said.
Other banks in the syndicate include Credit Suisse
, JPMorgan Chase, Bank of America Merrill Lynch
and Deutsche Bank.
At the IPO price, the club's enterprise value comes to about
5.5 times revenue. That is far below the 8.3 times multiple paid
by a group of investors for the sale of Los Angeles Dodgers
baseball team, in what was one of the richest deals in recent
times. At the high end of the price range, Manchester United
would have been valued at 8 times revenue.
But the IPO price also values Manchester United at 19 times
its adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) in the 12 months through June 30, making
it richer than Disney, which trades at around 10 times.