For Celtic plc (LSE: CCP) or CLTFF to sell the company to the highest bidder through a Strategic Review Process similar to what Augusta Gold (TSX: G) is about to do and what WWE did last year, Dermot Desmond would be the one making the decision that he wants to sell the company. So far, there are no signs that he wants to sell the company, but there weren't any for Augusta Gold or WWE until they launched Strategic Review Processes.
Dermot Desmond on a fully diluted basis owns 39.87% of Celtic shares outstanding, but factoring in the approximately 20% of ordinary Celtic shares permanently lost from over 100 years ago when it was a private company, he essentially owns about a 50% stake.
Some NIA members have raised concerns that somebody could offer Dermot Desmond a premium for his shares and gain control without buying the entire company thereby screwing over all of the other shareholders. However, UK law says that if an investor acquires 30% or more of a company’s voting rights, they are generally required to make a mandatory offer for the remaining shares. Dermot Desmond was able to increase ownership to 30%+ through the company's 2006 rights offering. Shareholders in 2006 had the right to buy at a discount to its then market price, 1 additional share of Celtic for every 2 shares owned. When only a small percentage of existing shareholders agreed to participate in the rights offering, Dermot Desmond agreed to buy all of the remaining unsold shares. He received approval from shareholders plus a waiver from regulators to increase his ownership to over 30% control of voting rights because it was a new share offering to existing shareholders for the purpose of repaying debt and constructing their Lennoxtown Training Complex.
The only way for somebody to purchase the stake of Dermot Desmond today would be by buying the entire company.
When the Glazers launched its process to explore strategic alternatives for Manchester United (MANU), they either wanted a full sale of MANU or a minority investor who would put in new funds. They eventually decided to allow Jim Ratcliffe to purchase a 25% stake of previously issued shares and buy $300 million worth of newly issued shares. All MANU shareholders were allowed to sell 25% of their position in a tender offer at $33 per share. However, after the tender offer for 25% of MANU was completed, MANU declined back down because the Glazers were still in control of the company and MANU is terribly managed with massive losses. MANU once again failed to qualify for the UEFA Champions League.
Celtic plc (LSE: CCP) or CLTFF successfully qualified for the UEFA Champions League and is highly profitable with a strong balance sheet. Despite spending far less on player wages, Celtic would easily defeat MANU in a match.
CCP or CLTFF has £77.2 million in net cash as of June 30th. By tomorrow evening, CCP will have over £100 million in net cash.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. NIA's President has purchased 224,200 shares of G in the open market and intends to buy more shares. This message is meant for informational and educational purposes only and does not provide investment advice.
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