Manchester United: Sir Jim Ratcliffe’s determination should on no account be underestimated | Business News
One view of Sir Jim Ratcliffe in the business world is that he is an opportunist, an astute trader who likes to buy assets from distressed sellers at low-ball prices.
That characterisation – that he is the chemicals industry’s equivalent of rag-trade king Sir Philip Green – is rather unfair.
Yes, Sir Jim is an exceptionally shrewd buyer of assets, but he has also shown himself to be a careful long-term investor and patient builder of businesses.
But he did not get to become Britain’s richest man by overpaying for things.
That is the context into which news that the Ineos owner has expressed an interest in buying Manchester United should be placed.
According to a report on Bloomberg yesterday, the Glazer family – which owns a controlling stake in the OId Trafford club – is considering selling a minority stake.
A spokesman for Ineos subsequently made clear: “If the club are for sale, Jim is definitely a potential buyer.”
But United fans desperate to see the back of the Glazers ought not to get their hopes up.
For a start, the Glazers have not said the club is for sale, it has merely been reported that they are looking to bring in outside investment.
This is something, of course, that the family has already done previously when, in 2012, it floated Manchester United on the New York Stock Exchange and sold a minority stake in the business to outside investors.
The family now own roughly 69% of the club but retains control because it owns all of the class B shares – which have 10 times the voting power of the publicly quoted A shares. It is by no means clear that the family are yet prepared to give up full control.
Secondly, if newspaper reports are to be believed, the Glazers put a rather higher valuation on United than the market does.
The club’s stock market valuation at the closing price on Wednesday evening was £1.85bn ($2.23bn).
That is significantly lower than the £5bn ($6bn) valuation that the Glazers are said to place on it.
It is highly unlikely that Sir Jim, who has never knowingly overpaid for anything in his career, would be prepared to pay anything close to that.
All that said there is something irresistible about the idea of Sir Jim, a boyhood fan who was born just up the road in Failsworth, taking ownership at Old Trafford.
Sir Jim – who grew up in a council house and whose first degree was in chemical engineering at Birmingham University – has an inspiring story.
What makes him such a fascinating personality is that not only is he a chemical engineer, but he also understands financial engineering, having qualified as a management accountant after beginning his career at Esso Petroleum and the chemicals, textiles and fibres company Courtaulds.
Still in his 30s, he joined Advent, the private equity firm, in 1989.
From there, he co-founded Inspec, a business formed from BP’s speciality chemicals division, which had been bought for £40m in 1992.
Less than two years later, he had floated the business on the London Stock Exchange with a valuation of £136m, before most of it was bought by rival Laporte for £611m in 1998.
That year saw him buy Inspec’s petrochemicals business – the operation that was to become Ineos.
He told the Financial Times in 2006: “Starting Ineos was a natural progression based on my experience.
“My time at Advent was spent advising clients on the growth and development of businesses in the chemicals sector.
“An opportunity presented itself with Inspec and after five years advising companies, I thought it was time to put the advice into practice.”
Sir Jim rapidly built Ineos into one of the UK’s biggest chemicals businesses through a string of acquisitions.
Still a largely unknown business outside the chemicals industry, it first attracted wider interest when in 1999 it bought ICI’s acrylics business – best-known for its Perspex product – for £505m.
More people began to pay attention when the following year, it took three more businesses off ICI’s hands, including a giant plant in Runcorn, Cheshire, responsible for producing the vast majority of the UK’s chlorine and caustic soda.
But the transaction that really put it on the map came in 2005, when it paid £5bn for the bulk of BP’s petrochemicals business, at a stroke becoming the world’s fourth largest independent player in the field.
With it came the company’s world-famous 80-year-old petrochemicals plant at Grangemouth in Scotland.
What made the company’s growth all the more remarkable, was that it was buying assets in competition with private equity companies.
In an interview with Chemical Week, in 2001, Sir Jim explained: “We’ve found greater receptiveness from sellers because we’re not a private equity capital company.
“Chemical companies are more comfortable dealing with us than with accountants from the private equity capital sector, who are a different breed of people.”
In all, Sir Jim spent getting on for £5.8bn ($7bn) between 1998 and 2008 acquiring 22 businesses, fuelled by debt.
Ineos was built on a mountain of the stuff – and this put it in a precarious position when the global financial crisis struck in 2008.
The company’s bankers sought to seize control of the business and Sir Jim had to fight hard to keep it.
But fighting is something in which, by then, he was already well-versed.
Ineos has fought a number of battles down the years – for instance, demanding public money from the Blair government to keep Runcorn alive and facing down unions at Grangemouth over their pension benefits.
The banks found him no less compromising.
He was similarly uncompromising when, in 2013, he actually closed Grangemouth – then losing £10m per month – after unions refused to agree to changes in working conditions.
They eventually backed down.
One rare setback for Sir Jim has been in fracking.
He has long argued that the UK would enjoy as bright a future in manufacturing were energy costs for businesses as low as they are in the United States and, to that end, has spent tens of millions of pounds on fracking projects in the UK – all to no avail.
He has since invested heavily in hydrogen technology.
In the meantime, the acquisitions have picked up again at Ineos, most notably with the 2017 purchase of the Forties Pipeline System from BPO.
During the last decade or so, though, Sir Jim has also started to enjoy his wealth.
He has bought the Belstaff clothing brand, football clubs in France and Switzerland, supported an America’s Cup challenge in sailing and become a principal partner of the Mercedes F1 team.
He bought the Team Sky cycling franchise, which has since been rechristened Team Ineos, and has invested £1bn in the Grenadier, a 4×4 vehicle he hopes will succeed the Land Rover Defender.
There was also an attempt to buy Chelsea earlier in the year.
An acquisition of Manchester United, though, would be of a whole different order to any of those deals.
It is hard to see how a deal happens at the moment.
The Glazers are not willing sellers in the way BP, ICI, BASF and the other big multinational companies who have sold Ineos assets down the years were.
If he has genuinely put his mind to it, though, Sir Jim’s determination should on no account be underestimated.