Offer for Juve is simply too low

Sports, crypto billionaires, industrial dynasties, special voting rights and Italian politics: Tether’s bid for Juventus football club stamps every number on the dysfunctional M&A bingo card, argues the Financial Times. . Tether, the biggest issuer of stable coins, has offered to buy the 36-time Italian champions for €1.1bn in cash.

It already has an 11.5 per cent stake but picking up the rest requires it to win over the Agnelli family, known for its role in founding carmaker Fiat. The Agnellis have controlled Juventus for more than 100 years. Exor, their holding company, insists the team is not for sale.

There are good reasons for family scion John Elkann, who runs Exor, to turn down Tether’s current offer. His company is already under fire from politicians for trying to sell its famous local newspapers; selling another national champion to an 11-year-old crypto company based in El Salvador could bring further political risks.

More importantly, the bid is simply too low. Juventus’s stock traded above the €2.66 a share offer price as recently as November. Globally recognised football clubs are a scarce asset and prices have been surging recently. Just last month, private equity firm Apollo bought a stake in Atlético Madrid at a reported valuation of around €2.5bn.

Even at a low point in the 2023-24 season, Juventus’s revenue of €356mn put it 16th in Deloitte’s ranking of global football clubs. If it were valued on a similar multiple of revenue to Atlético, Juventus could be worth at least €2.1bn, or closer to €3bn using a longer-term average.

Tether — flush with cash and led by a pair of Juventus fans — presumably has more up its sleeve. True, Atlético is an unusually well-run and profitable club, whereas Juventus has had a poor run recently. But on a longer-term view, Juventus is a much bigger brand. It has more than twice as many followers across social media, according to the CIES Football Observatory, and is the only Italian club in the global top 10. In that respect, Tether is acting like a classic corporate raider: find a company with strong fundamentals going through a rough patch, return it to health and emerge with a tidy profit.

The difference is, the Agnellis can ride out pressure more easily than a normal firm. Thanks to their special voting shares, they have 85 per cent of the votes in Exor, which in turn wields 78 per cent of the votes in Juventus — despite the clan having roughly a 35 per cent effective economic stake in the football club. What Elkann says, therefore, goes.

Tether has plenty of capacity to come back with a higher bid, but its resources aren’t infinite: it is also trying to raise $20bn in fresh funding from investors, which gets harder if backers think it’s wasting too much on a trophy asset. Elkann, then, can choose his priorities.

Accepting an improved bid could have a benefit beyond the money it brings in, by demonstrating that Exor cares about minority shareholders and is more than just a family plaything. If he decides the family silver isn’t for sale at any price, Exor’s minority shareholders will remain like fans at a Juventus match — free to shout from the sidelines, but powerless to change the outcome.