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OK, its a super busy morning at the day job but I probably should weigh in briefly on the latest in the Ek takeover story
Apologies in advance for the inevitable reality that I haven& #39;t read all the articles or all the tweets; been too busy with railroads and gold mines and spam software and lots of other actual and real M&A this morning!
Daniel Ek probably has enough money to lead a consortium to buy Arsenal. His 16.75% stake in Spotify is worth a touch over $9 billion and he presumably has some other assets, though I would imagine the overwhelming majority of his wealth is tied up in that Spotify stake
The problem is that it would be pretty unwise for Ek to borrow a big slug of money against that stake. He& #39;s CEO of Spotify, and if the stock goes down a lot he would get a margin call. The CEO being forced to sell to satisfy a margin call is a very, very bad thing
And Spotify is not exactly Wal-Mart in terms of being a stable, boring stock. Spotify is still loss-making, and the stock trades ~4.5x this year& #39;s revenue expectations. Stocks like that can go down fast if the market sours on them **NOT INVESTING ADVICE**
To be prudent, he& #39;d be much better off selling a portion of his holdings to fund a bid, even though that would crystallize a big tax bill for him.
At any rate, that& #39;s a side issue. The big problem is that deals require a willing buyer and a willing seller. I don& #39;t doubt that Ek and his partners are a willing buyer. But there& #39;s little to no reason to believe KSE is a willing seller
Start with the obvious. Alisher Usmanov spent more than a decade trying to convince KSE to sell to him, eventually came to the conclusion that they would never sell and sold his stake to them.
Continuing with the obvious, Josh Kroenke said last week that KSE were absolutely not sellers. That probably says a lot!
Now the Super League& #39;s failure might be a good reason for KSE to consider selling. If their investment case was predicated on the idea that European football would become a more rational investment environment, that hope is severely dented by the events of the last 2 weeks
I don& #39;t think the protests are much of a reason for them to sell up. I& #39;m sorry to say this, cause I know a lot of people are really emotionally invested in the protests, but when I put myself into the heads of the Kroenkes I can& #39;t imagine they give a flying fuck about protests
They don& #39;t live in North London, they don& #39;t go to the games, they just see this on TV. This is not the first time people have hated them cause of their sports investments. They just stay quiet and let the tide roll over, as it tends to do
If anything, folks like them typically don& #39;t want to be seen as caving to public pressure - though I don& #39;t want to go too far down this path, I& #39;m just guessing and I don& #39;t really know anything more than the rest of all of us
But moreover, you look at the deals the Kroenkes have done in the past, they tend to be very quiet, behind-the-scenes operators.
If I had the money to buy Arsenal and I wanted to convince them to sell, I would not be tweeting and I wouldn& #39;t be going to the media
If I had the money to buy Arsenal and I wanted to convince them to sell, I would not be tweeting and I wouldn& #39;t be going to the media
You want to do business with quiet, behind-the-scenes players? Best way to do it is to adopt their style - try to convince them to sell quietly, behind the scenes
