Thursday, August 30, 2007

The New Face of Arsenal?

Yeah, that's Alisher Usmanov., new owner of the 14.5% of Arsenal shares formerly owned by David Dein. Not exactly Abramovich in the style department, is he?

Nor in other areas, either. Abramovich, to his credit, has managed to keep out of Moscow politics, even while being an elected governor of Russia's remote Chukotka province. He has always been careful never to get on Putin's bad side (his good friend Mikhail Khodorkovsky did so and he is now spending 10 years behind bars), but he has never been seen as a Putin cheerleader, either. Usmanov, in contrast, is very definitely a "Putin" oligarch. One of his more recent purchases was to Kommersant, one of the few remaining opposition newspapers which he allegedly did in order to turn it into a pro-Putin broadsheet

(For what it's worth, the US State Deparmtent's 2006 Russian Federation Country Report on Human Rights says there has been no discernable shift in Kommersant's editorial policy since the purchase).

In a neat coincidence, Kommersant used to belong to Boris Berezovsky, one of the first oligarchs to fall foul of Putin, fled into exile in London in 2002. Berezhovsky, long thought to be part of the obscure consortium financing Kia Joorabchian's MSI, was recently indicted in Brazil along with Joorabchian for having used MSI and Corinthians as a vehicle for money laundering. In response, Berezhovsky issued an indignant press release and said he could have nothing to do with Corinthians because "he was an Arsenal fan". Indeed, Emirates is so well known as a Berezhovsky hangout that his box might have been the site of an attempt on his life: during the Litvinenko assassination investigation last year, Berezhovsky's box at emirates was named by London police as one of the many sites around the city where traces of Polonium-210 were found. This raises the possibility that the take-over bid is in fact simply another Putin-inspired attempt to get at Berezovsky (although, to be fair, Usmanov also had a box at the Emirates last year).

Who is Usmanov, you may ask? An ethnically-Uzbek Russian citizen, steel magnate and 267th richest man in the world, according to Forbes. But he's obscure enough that he doesn't have his own wikipedia entry, which tells you something. But the Times has managed to pick up some useful stuff .

Something about this whole thing doesn't quite add up yet, though. Dein was kicked off the board for consorting with American Stan Kroenke, owner of another 12.2% of Arsenal stock - now he winds up working for Usmanov (technically, he sold his shares to an Usmanov-controlled company called "Red and White Holdings Limited", of which Dein is now the chairman). Does that mean Kroenke is now selling and Dein acting as a broker? Certainly, Dein says that Red and White are committed to buying more shares though adds that there is no "current intention" to buy the club outright (weasel words if ever I've heard them). Or are Kroenke and Usmanov about to get into a bidding war?

With Kroenke on board, Usmanov would only need to buy Danny Fiszman's 24% holding to get majority control. Without Kroenke, he would need at least another 12% and only Nina Bracewell-Smith (who seems unlikely to sell) has that many. This means that a general buy-out offer to dispersed smaller shareholders would likely be necessary to gain control. In any case, Arsenal board members (who collectively own 45% of the club's shares) have collectively pledged not to sell their shares until April 2008. Given all the inevitable delay and uncertainty over this, why is Dein making his move now?

As for the price - Dein got a cool 75M GBP for his shares, which implies an overall market cap of 513M GBP. That's only a little above the 495M GBP valuation Forbes gave the club last year, but about 20% over the cap figure contained in Arsenal's last annual report.

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