Arsenal’s U.S. owner Stan Kroenke to buy rest of Russian billionaire’s stake

The majority owner of Arsenal soccer club agreed to buy Russian billionaire Alisher Usmanov’s stake in a £602.4-million ($781.1-million U.S.) deal, ending a dispute between the tycoons over management of the London Premier League team.

American billionaire Stan Kroenke will make an offer to acquire all the shares in Arsenal Holdings, he said Tuesday. Usmanov agreed to tender his 30 per cent stake in a deal that values the club at about £1.8 billion. Kroenke already owns about two thirds of the company.

Arsenal's U.S. owner Stan Kroenke announced an offer to buy the entire British football club, valuing it at £1.8 billion.
Arsenal’s U.S. owner Stan Kroenke announced an offer to buy the entire British football club, valuing it at £1.8 billion.  (ADRIAN DENNIS / AFP/GETTY IMAGES)

A fans’ group greeted Kroenke’s proposal to delist the publicly traded company with dismay, calling it a “dreadful day” since they will lose the chance to own shares in the club and make their voices heard at the annual meeting. With Usmanov’s departure, Arsenal also loses a shareholder who had pushed for the struggling club to spend more on buying star players.

Usmanov is the second Russian billionaire to pull back from an investment in the Premier League this year. Roman Abramovich, the owner of Chelsea football club, shelved a major redevelopment of the club’s stadium, blaming an unfavourable investment climate. The decisions come against a backdrop of worsening Russian-U.K. relations, with Britain accusing Russia of poisoning a former spy and his daughter in Salisbury, England.

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Despite his shareholding, Usmanov was shut out of the process of developing strategy at Arsenal and didn’t have a seat on the board. He criticized Kroenke last year as the team struggled through a disappointing season, saying the majority owner was responsible for the team’s performance on the pitch.

Manager Arsene Wenger, who had led the club since 1996, stepped down at the end of the most recent campaign, in which the team finished sixth in the league and again missed out on the elite Champions League competition.

“I have decided to sell my shares in Arsenal Football Club,” Usmanov said in a statement confirming the agreement. “I wish all the best and great success to this wonderful football club.”

A representative for Arsenal declined to comment.

Usmanov, 64, whose assets include an iron-ore producer and Russian phone carrier MegaFon, is Russia’s eighth-richest person with a net worth of $14.4 billion (U.S.), according to the Bloomberg Billionaires Index. His exit from Arsenal is likely to fuel speculation that he will deepen his relationship with Everton, a midranking Premier League team based in Liverpool. The Russian is a longtime business partner of Everton’s majority owner, Farhad Moshiri, and Usmanov’s USM Holdings sponsors the training ground.

Kroenke, 71, founded a real-estate development company that built shopping centres and apartment buildings. He owns the Los Angeles Rams of the National Football League. His wife, Walmart heiress Ann Walton Kroenke, owns the Denver Nuggets basketball team and the Colorado Avalanche hockey team.

Kroenke is consolidating his ownership as the team prepares to begin the season under new manager Unai Emery. The club has been outshone in recent years by cross-city rival Chelsea, as well as Tottenham Hotspur, which is moving into a new 62,000-seat stadium.

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Kroenke plans to make a compulsory buyout offer for all remaining shares once he has 90 per cent of the stock. The bid values Usmanov’s stake at more than £550 million and the remaining shares at about 52.4 million pounds.

Taking the company private will bring the “flexibility necessary to drive greater success of the club,” Kroenke’s KSE UK Inc. investment vehicle said in the statement. Of the Premier League’s 20 clubs, 18 are owned privately, and that model will best allow Arsenal to move quickly, the firm said. KSE’s goal is to see Arsenal competing consistently to win the Premier League and Champions League, the firm said. Manchester United Plc is the other publicly traded English club.

While Arsenal Holdings is listed on the NEX Exchange Growth Market for smaller companies, the shares rarely trade, given that Kroenke and Usmanov own a combined 97 per cent. Kroenke is offering £29,419.64 a share in cash, below the last trade on July 31 of 32,000 pounds.

Deutsche Bank is advising Kroenke, who plans to pay for Usmanov’s shares with £45.4 million of his own cash and a loan of £557 million from the bank. Interest on the debt will not be funded from the business of Arsenal, according to the statement.