Exclusive:Sheffield Wednesday takeover process to reach crucial stage with final bids expected - full state of play
The takeover process at Sheffield Wednesday will move imminently to a crucial late stage, The Star understands, with a full complement of best and final offer bids expected to be with the club’s administrators on Wednesday.
Sheffield Wednesday were placed in administration in late October after rising pressure from creditors including HMRC forced outgoing chairman Dejphon Chansiri to instruct insolvency practitioners Begbies Traynor LLP to take on the management and sales process of the club.
After weeks of marketing, negotiation and due diligence, The Star is of the understanding that a full complement of final offers is expected to have been submitted by Wednesday evening, meaning administrators will have a firm indication of the direction of which bidding party will be granted preferred bidder status to take into an EFL vetting process - though after formal bids are lodged, there may be a short further negotiation process should the two highest bids arrive at a similar level.
The asking price is believed to be between £30m and £35m once a non-refundable exclusivity fee and professional fees are taken into account. A formal offer of that figure would surpass the fee required to cover the cost of paying secured creditors 25 pence in the pound on what is owed to them by Wednesday and would therefore satisfy EFL rules that would otherwise incur a 15-point penalty heading into next season.
Alongside reports from BBC Sheffield and national media, The Star is of the shared understanding that three bidding parties remain actively involved in this late stage of proceedings as things stand. These are former Newcastle United owner Mike Ashley, a merged US consortium centred on bids from John McEvoy and the Storch family, and a bid led by former poker player and football analytics enthusiast James Bord - a sometime recruitment consultant for Sheffield United’s COH Sports owners.
The three remaining parties are understood to have undertaken a detailed due diligence mission that among other factors has contributed to the delay beyond an initial December 5 target date for a preferred bidder to be named. These processes are believed to have included a major financial commitment with up to seven figures spent on professional fees by each of the remaining bidding teams. The Star has reason to believe one of the parties engaged an independent surveying firm to spend two days undertaking a full structural survey of the ground and its surroundings last week.
Indicative offers lodged to the administrators are subject to contract and are therefore not legally bound, though The Star is told that ongoing discussions and negotiations around the due diligence process have given administrators indications that the £30m threshold will be retained from the bid stage to the final offer stage - though noting is certain until the final bids are confirmed. Should the highest final offer not reach that number, it’s believed to be possible that lapsed parties decide to re-join the race.
As widely reported, it is understood that the bid led by Mike Ashley is sat below that £30m threshold, though it is believed that number is higher than the £20m earlier reported. The two other bid teams are understood to have launched indicative offers of above £30m though should those bids fall away, the retail billionaire would be in pole position to take Wednesday ownership.
Beyond the level of offers from rival bidding parties and their own valuations of the project taken from their due diligence investigations, interested parties are clearly incentivised to pass the £30m threshold so as to avoid a 15-point deduction heading into what would be their first attempt of leading a Wednesday promotion back to the Championship.
Should things go smoothly, the process could move quickly to the extent that a preferred bidder is identified before the end of the week. It’s understood that if not, administrators are hopeful that stage can be reached before Christmas.
Discussions between the administration team and each party have been constant throughout. Beyond the due diligence launched on the club by the parties themselves, the club’s administrators have too undertaken forensic due diligence on each of the bidding teams in anticipation of an EFL vetting processes. It means the highest formal offer received - the one that would bring the best realisation to creditors - will not necessarily be put forward as the preferred bidder if there are serious doubts the prospective new owners would not satisfy the authority’s Owners and Directors Test.
The dawn of the Independent Football Regulator saw new powers instilled last Friday but those extend only to the investigation of existing owners. While their more stringent tests around fresh ownership will be brought into action in the summer and so will not apply to the final stages of the Sheffield Wednesday takeover process, their Owners, Directors and Senior Executives (ODSE) regime ushers in a new set of rules for club custodians to operate by and has required its own course of analysis.
The process to date has been a busy one. For parties who showed their viability by offering proof of £50m liquid assets, a detailed bidding sheet was issued by administrators to collect a range of pertinent information including details of the individuals involved in each bid, as well as each bid’s indicative offers and intended payment structures. The deadline for these bids was November 21 and were invited at any figure, though it’s understood parties were made aware of the likely high bidding level.
After a wide range of parties took a look at the club’s offering via data rooms set up to present a clearer view of the club’s financial landscape, administrators received five indicative bid sheet offers they then took forward into negotiation proceedings, as well as one particularly affluent party who it was felt would make a competitive bid but since stepped away from the process without doing so.
The Star understands that one party was eliminated when it became clear their final offer would not be as competitive as the other bids remaining in the process - before two of the other bids by US groups merged into one bid team. Inactive bid teams have been able re-enter the process with a competitive offer at any time. The process is said to closely follow previous methods used by Begbies Traynor in previous football administration cases.
After weeks of activity, proceedings appear to be nearing their end game.