It’s put up or shut up on Whites takeover
Yorkshire Evening Post 11/8/12
By Phil Hay
The fate of a bid by a Middle Eastern consortium to take control of Leeds United is likely to be decided in a matter of days, according to a prominent legal expert.
Sports lawyer Richard Cramer believes Leeds and their prospective buyers have reached the stage of “put up or shut up” after a deal to sell United ran into trouble earlier this week.
An attempt to take outright control of Leeds has been under discussion for more than two months, with an agreement understood to have been reached in principle at the end of June, and the would-be purchasers had been reviewing United’s accounts with the protection of an “exclusivity period”, preventing other interested parties from putting forward rival offers.
But that exclusivity period expired last week with the sale of United incomplete and Leeds reacted to reports that the takeover had collapsed by issuing a statement effectively inviting new investors to come forward.
Cramer told the YEP: “It might be a case of brinkmanship – Leeds effectively saying to the buyers ‘put up or shut up’ – and it seems clear enough that the deal has run into trouble. In my experience ‘put up or shut up’ is exactly where they’ll be at the moment.
“We were told that due diligence started on June 26 and I’d have expected that process to start and finish in the space of three to four weeks, especially because we’re in the middle of pre-season and a crucial period for the club.
“Any clued-in buyer would be aware of that. We’re seven or eight weeks on now and that’s not a good sign.
“When we went past the end of July you started to suspect that something was up. Given what’s gone on this week and given the fact that the process has taken so long, my personal view is that it’s unlikely this deal will happen but not impossible. I think a decision will be taken one way or the other very soon, probably in a matter of days.”
This takeover would not be the first to stumble at the final hurdle and recover in time to reach the finishing line.
The recent purchase of Watford by the Italian Pozzo family appeared to fall through on June 22 when Watford’s previous owner, Laurence Bassini, said: “The deal is definitely off. They don’t have the money.”
Seven days later, the deal went through. The sale of Sunderland to Ellis Short in 2008 also survived last-minute complications to reach a successful conclusion.
But Leeds themselves cast doubt on the likelihood of immediate investment from the Middle East by saying: “Leeds United announces that the exclusivity period granted to a potential investor as mentioned in the statement of June 26 has ended.
“The club remain happy to continue discussions, but not on an exclusive basis, so as not to prevent other options passing.
“The first priority must be to ensure that the credibility of any future investor or ultimate owner is such that the Leeds legacy and its future is in safe hands, back in the Premiership.
“The club will continue to be receptive to approaches from potential new partners who can establish that they have the necessary credentials.”
Problems with the proposed takeover of United became apparent on Wednesday when United chief executive Shaun Harvey flew to Monaco to meet club chairman and owner Ken Bates.
It was seen as an attempt to advance the process and bring about a swift resolution but the talks instead prompted speculation of an imminent collapse in negotiations. The YEP has since been told that the buy-out “isn’t definitely on but isn’t definitely off either” and discussions are understood to have continued yesterday.
Cramer said: “It’s so often the way. You get through a lot of work and a lot of talking but when you reach the end of the line, difficulties arise.
“If this is a consortium of three or four individuals then it’s possible that one or two of them have got cold feet or broken ranks and changed their demands.
“It’s possible too that Leeds at the death are wanting a slightly different deal. It’s not unusual but it doesn’t bode well.
“Aside from the time involved, you can rest assured that a huge amount of money has been spent on this.
“You normally pay a fee for an exclusivity period and you can bet your bottom dollar that the buyers have lost that now.
“You also have the expense of due diligence and the bill created by hiring a large commercial law firm to do the work.
“It’s a serious and intensive process – not the sort of thing you get into if you’re not really sure about going through with the deal.
“The statement from Leeds told us a few things: firstly, the door to this deal isn’t quite closed. Secondly, these buyers no longer have the protection of exclusivity.
“So they’re going to have to get on with it or walk away altogether. I can’t see it dragging on much longer without a final decision.
“But what’s also clear is that the club is definitely up for sale. The statement talked about ultimate owners which is a takeover by a different name. It suggests that if the right offer is there, Ken Bates is ready to go.”
A confidentiality clause agreed by Leeds and the Middle Eastern consortium has prevented any side from making any comment apart from the occasional statement from United. Cramer said Wednesday’s statement was likely to have been drafted with legal advice, avoiding any remarks which might further threaten the takeover.
But Cramer, a lawyer with FrontRow Legal in Leeds, warned that the full story of the negotiations could remain confidential for up to five years under the terms of the negotiations.
“We might never know the ins and outs of all this,” he said. “The one thing we know for sure is that a confidentiality clause is binding on both sides.
“The clause can apply long after negotiations have ended.
“I’ve seen agreements in which confidentiality was agreed for five years.
“Unless Leeds and the buyers consent to waive the clause, I don’t expect to see the full picture.”
By Phil Hay
The fate of a bid by a Middle Eastern consortium to take control of Leeds United is likely to be decided in a matter of days, according to a prominent legal expert.
Sports lawyer Richard Cramer believes Leeds and their prospective buyers have reached the stage of “put up or shut up” after a deal to sell United ran into trouble earlier this week.
An attempt to take outright control of Leeds has been under discussion for more than two months, with an agreement understood to have been reached in principle at the end of June, and the would-be purchasers had been reviewing United’s accounts with the protection of an “exclusivity period”, preventing other interested parties from putting forward rival offers.
But that exclusivity period expired last week with the sale of United incomplete and Leeds reacted to reports that the takeover had collapsed by issuing a statement effectively inviting new investors to come forward.
Cramer told the YEP: “It might be a case of brinkmanship – Leeds effectively saying to the buyers ‘put up or shut up’ – and it seems clear enough that the deal has run into trouble. In my experience ‘put up or shut up’ is exactly where they’ll be at the moment.
“We were told that due diligence started on June 26 and I’d have expected that process to start and finish in the space of three to four weeks, especially because we’re in the middle of pre-season and a crucial period for the club.
“Any clued-in buyer would be aware of that. We’re seven or eight weeks on now and that’s not a good sign.
“When we went past the end of July you started to suspect that something was up. Given what’s gone on this week and given the fact that the process has taken so long, my personal view is that it’s unlikely this deal will happen but not impossible. I think a decision will be taken one way or the other very soon, probably in a matter of days.”
This takeover would not be the first to stumble at the final hurdle and recover in time to reach the finishing line.
The recent purchase of Watford by the Italian Pozzo family appeared to fall through on June 22 when Watford’s previous owner, Laurence Bassini, said: “The deal is definitely off. They don’t have the money.”
Seven days later, the deal went through. The sale of Sunderland to Ellis Short in 2008 also survived last-minute complications to reach a successful conclusion.
But Leeds themselves cast doubt on the likelihood of immediate investment from the Middle East by saying: “Leeds United announces that the exclusivity period granted to a potential investor as mentioned in the statement of June 26 has ended.
“The club remain happy to continue discussions, but not on an exclusive basis, so as not to prevent other options passing.
“The first priority must be to ensure that the credibility of any future investor or ultimate owner is such that the Leeds legacy and its future is in safe hands, back in the Premiership.
“The club will continue to be receptive to approaches from potential new partners who can establish that they have the necessary credentials.”
Problems with the proposed takeover of United became apparent on Wednesday when United chief executive Shaun Harvey flew to Monaco to meet club chairman and owner Ken Bates.
It was seen as an attempt to advance the process and bring about a swift resolution but the talks instead prompted speculation of an imminent collapse in negotiations. The YEP has since been told that the buy-out “isn’t definitely on but isn’t definitely off either” and discussions are understood to have continued yesterday.
Cramer said: “It’s so often the way. You get through a lot of work and a lot of talking but when you reach the end of the line, difficulties arise.
“If this is a consortium of three or four individuals then it’s possible that one or two of them have got cold feet or broken ranks and changed their demands.
“It’s possible too that Leeds at the death are wanting a slightly different deal. It’s not unusual but it doesn’t bode well.
“Aside from the time involved, you can rest assured that a huge amount of money has been spent on this.
“You normally pay a fee for an exclusivity period and you can bet your bottom dollar that the buyers have lost that now.
“You also have the expense of due diligence and the bill created by hiring a large commercial law firm to do the work.
“It’s a serious and intensive process – not the sort of thing you get into if you’re not really sure about going through with the deal.
“The statement from Leeds told us a few things: firstly, the door to this deal isn’t quite closed. Secondly, these buyers no longer have the protection of exclusivity.
“So they’re going to have to get on with it or walk away altogether. I can’t see it dragging on much longer without a final decision.
“But what’s also clear is that the club is definitely up for sale. The statement talked about ultimate owners which is a takeover by a different name. It suggests that if the right offer is there, Ken Bates is ready to go.”
A confidentiality clause agreed by Leeds and the Middle Eastern consortium has prevented any side from making any comment apart from the occasional statement from United. Cramer said Wednesday’s statement was likely to have been drafted with legal advice, avoiding any remarks which might further threaten the takeover.
But Cramer, a lawyer with FrontRow Legal in Leeds, warned that the full story of the negotiations could remain confidential for up to five years under the terms of the negotiations.
“We might never know the ins and outs of all this,” he said. “The one thing we know for sure is that a confidentiality clause is binding on both sides.
“The clause can apply long after negotiations have ended.
“I’ve seen agreements in which confidentiality was agreed for five years.
“Unless Leeds and the buyers consent to waive the clause, I don’t expect to see the full picture.”