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Analysts say where Mike Ashley is desperate to spend £300m Newcastle United takeover cash ASAP – Report

3 months ago
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Mike Ashley is now in the process of selling Newcastle United.

In 2008, the NUFC owner told fans they could stop their protests because he promised he would sell the club ASAP.

For 12 years Mike Ashley pretended he was willing to sell but in reality had no intention of doing so, until now.

Even the most cynical of fans, forced to accept that an agreement has indeed been reached for Ashley to sell Newcastle United, with Saudi owners waiting to take over once the Premier League give the go ahead.

That go ahead was expected to come withing four weeks but now it is five weeks since the Premier League started their process.

Fans are getting jittery and indeed Mike Ashley is reported to be frustrated that the deal hasn’t been approved yet and most importantly, he hasn’t yet been able to put the £300m+ in his back pocket.

So what exactly is Ashley going to do with that money, which really answers the question as well, why did Mike Ashley now decide to sell after 12 years of refusing to do so?

Interesting to see the Evening Standard have been speaking to business experts / analysts to try and answer that question.

Whilst the expert view amongst the analysts is that Mike Ashley will indeed to an extent look to take advantage of other struggling retailers and brands in this virus crisis, his biggest priority and why he has decided to cash in Newcastle United now, is because Ashley desperately needs the money to shore up HIS OWN struggling high street empire.

Mike Ashley faces massive challenges with his Frasers Group (formerly Sports Direct International Group) empire, with an already shocking reputation, Ashley’s actions in response to the virus crisis saw that reputation plummet to an all time low.

Struggling to access government help, Ashley’s Fraser Group announced in April they had came to an agreement with Belgian tax authorities regarding their £605m tax demand. Whilst the Frasers Group share price has crashed by 55% in only three months, from 503p on 20 February 2020 to 232p at noon today (13 May 2020).

The Evening Standard reporting that business experts have told them that Mike Ashley is set to ‘funnel funds into existing assets, which also include House of Fraser, Flannels, Evans Cycles, Sofa.com and a stake in French Connection’, as a priority over new investments.

The newspaper says that analysts believe Mike Ashley could still spend some of the £300m+ from a Newcastle United sale on other businesses but not rushing to do so as bigger problems to deal with in his existing retail empire.

The Evening Standard quoting:

Peel Hunt analyst Jonathan Pritchard: “I would think he’s unlikely to do anything too soon as life will be tough for all his formats right now and he may need the cash to shore up existing investments.”

CMC Markets analyst David Madden said: “Mike Ashley has a track record of snapping up failing High Street businesses, but given the pain that traditional retailers are enduring on account of the lockdown, I doubt he will be quick to rush out and spend his cash. I’d imagine he will use the cash to ensure liquidity for existing operations, and potentially earmark some for expansion.”

Richard Hyman: “He will have thought for some time that beyond all the grief he gets, he can make much better use of the money….As usual, these will not be ‘rescues’ but strategic purchases of assets without liabilities for pence in the pound. There will be virtually no competition to buy these and I have no doubt that Mike Ashley will be looking at most of them. The key is sorting the wheat from the chaff. This is less critical in a growth market but will be fundamental in the market we are about to enter – one that will be declining fast. No wriggle room if you back the wrong horse.”

The suspicion amongst Newcastle fans was that Mike Ashley would only be willing to sell the club if outside factors forced it.

It has ‘only’ taken his retail empire really struggling and then a global pandemic and global recession of top of that for it to happen.

I wonder if without such extreme factors all coming together, he would EVER have agreed to sell NUFC?

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