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Manchester United Going Public

The football club is lowering its IPO price to $14 per share after criticism from Morningstar

Alanna Petroff 10 August, 2012 | 10:36AM

Manchester United (MANU) is set to become a publicly traded company on the New York Stock Exchange on Friday, and now investors can get in on a piece of the action for a lower price. The football club reported that it would be selling shares at $14 each, which is below the $16-$20 price range that was previously announced.

This cut to the share price comes after criticism by Morningstar and other research firms. Morningstar currently believes the fair value of the company is closer to $10 per share, which is significantly below the reduced offering price.

In a report titled “Manchester United: Winning Team, Winning Brand, Challenging Valuation,” Morningstar analysts explained that while “the Manchester United trademark has considerable value, as it can be leveraged to secure sponsorships and broadcasting revenue and to sell numerous consumer products ... We preliminarily value Manchester United at approximately $10 per share.”

However, the report notes that “shares could trade at a significant premium to our fair value estimate if the market values the soccer team in line with other successful sports franchises.”

Man U is offering 16,666,667 Class A Ordinary Shares, which will raise $233 million to pay off debt. The club has been run by the Glazer family since 2005.

The Friday listing comes after Man U abandoned earlier attempts to float in Singapore.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.