A Middle East view on the Newcastle takeover: Why a deal could be further on than we think

The Newcastle United takeover talk has ramped up this week with PCP Capital Partners first bid for the club. Former NUST chairman Neil Mitchell, who lives and works in the Middle East and was prominent in attempts to further a fan takeover of the club, presents his view.

Inshallah. It’s a word that I’m sure is familiar to anyone who has spent any prolonged period of time in the Middle East.

Directly translated it means “if God wills it”. It’s a word very easily dropped into a sentence when you are waiting for something to happen, an important document to be processed or a timely decision to be made. It is a word of hope and positivity that God’s will will shine upon you – but it can be a frustrating and an infuriating word at times as well. Sometimes everything, it seems, will happen over here ‘Inshallah” – especially when you need or want it to happen now.

It has become so much part of the Middle East culture that things happen ‘Inshallah” that it is very easy to believe that everything, from building a skyscraper to financing a multi-national takeover deal is done in this laid back way: sealed with a handshake and an ‘Inshallah’.

And while I think that some times some businessmen in this part of the world would like you to think that this is how it is done I can assure you that the reality couldn’t be further from this. They are ultra-professional, exacting and take their due diligence seriously and to the next level sometimes.

A recent report said that PCP Capital had asked for 27 years of Newcastle’s accounts and I can believe that. A friend here in Dubai who works closely with the board of a regional bank recently had to gather FORTY years of accounts together ahead of a merger. By any standards that is exacting diligence.

I also know they value integrity and privacy highly during business deals and so any leaks to the press really don’t help at all.

Knowing Mr. Ashley and how he likes to do his business and having been involved in a campaign and a potential deal with him personally I am quite sure he will also be infuriated and frustrated by the leaks of any details.

Wherever this information was leaked from, thankfully, does not seem to have scuppered any deal. As frustrated as they are there – thankfully – appears to be a willing seller ready to negotiate and a very eager buyer, not distracted or concerned by anything uncovered during their extensive and comprehensive due diligence.

So where do we stand now? We have reports of a bid made in the region of £300million by Amanda Staveley and PCP Capital Partners. This, taken at face value is around about £80million short of the claimed asking price that Mike Ashley made public a few months ago. Add to this the rumoured staged payments and clauses and it would seem that there is some way to go before a deal is agreed.

I am quite sure both sides would much prefer this to have been done without media leaks, which have interestingly been to the business news press rather than the sporting press. These have led to an understandable degree of excitement and expectation and thankfully both sides seem willing to negotiate and move on.

There is, however, a danger that this could become protracted and while I know this isn’t what everyone wants to hear and most certainly not what I want to say as a fan, we must be realistic. There is still a lot of work to be done.

The next stage should see Ms Staveley and her team move into exclusivity. This is a period, often of 30 days, where if there are other serious offers and anyone doing due diligence they are excluded from the process to allow PCP Capital Partners an opportunity to wrap up the deal. This will need a fee to be agreed and a deal in principal in place. There is still a lot to do from there. This stage will be argued between and finalised by the two sides’ legal teams and accountants.

Interestingly it appears that the PCP Capital legal team is from Freshfields – a name we should be familiar with as one of the partners there is Chris Mort, who is no stranger to Newcastle United.

I see this as a good thing myself. Firstly, he was one of the few appointees of Mike Ashley who came away with his reputation intact and who did develop a positive rapport with the fans. Many were disappointed when he moved on for personal reasons but he remains a fan of NUFC to this day, I understand.

More importantly he knows the club and its culture and most certainly he will know how to deal with Mike Ashley. This is critical because he may just know the right button to push that could seal the deal.

Once we enter exclusivity even this process will need a lot of positive interaction between both sides to conclude a deal quickly. The key question on everyone’s lips is “can this be done for Christmas?”

Well it is, in my opinion, a long shot but possible. We have a willing seller – one who has stated a desire to be done by Christmas – and we have a buyer, fully focused on the purchase of Newcastle, who knows the importance of the January transfer window to ensure Premiership status for our team.

I am sure she would be very willing to allow Rafa Benitez to add significantly to the squad should he feel the need. I also feel that Mr Ashley is not reckless enough to not to allow Rafa to strengthen if the deal is not concluded before January.

This, if talks were still ongoing, would almost certainly weaken his hand. To jeopardise the value of the asset by allowing it to be relegated for a third time under his tenure as owner would be financial suicide. He is a gambler and a risk taker but surely even he must realise the folly of not protecting the asset he is in the process of selling?

For me overall it is this situation – with January looming and other factors such as the pending HMRC case – that gives potential buyers the sort of leverage that no one who has previously tried to buy the club have had.

This desire on both sides could just be the key to making the process smooth once exclusivity is entered. This is also, however, a reflection on the levels of due diligence done by the potential buyers. And it is this level of professionalism and research that leads many to still believe that Middle East deals look like they’ve been done on a handshake and an “Inshallah”, because once they usually start making a noise about it, most of the background work has already been done.

Take, for example, the Manchester City buyout that Ms Staveley was involved in. This time that opportunity has been taken away from them.

As fans we must remain positive and warm towards the deal. It is easy to become impatient. I know I am too. The prospect of a potentially bright and exciting future awaits.

I believe we must direct that positivity towards Rafa and the team, as we have since he arrived at the club. The timing of this news is interesting. If released when the bid was made it could have totally disrupted the build up to the trip to Old Trafford. Released now we can use this wave of positive excitement to build to a crucial home game at the weekend.

I wish I could be at St James’ Park because I know the atmosphere will be electric and it would be an audio-visual reminder to Amanda Staveley and PCP Capital Partners of what awaits them. Don’t underestimate the effect such demonstrations can have on making the difference in these negotiations. There is more than one way that you can apply the term “fan power”!

I think it’s going to be difficult but a sale by Christmas can be done. It needs Mr Ashley to remain willing, which I feel will not change. It needs the exact terms to be thrashed out smoothly and efficiently and I think there is plenty of middle ground to be found to facilitate this. We need no last-minute hitches.

I believe that as I write the deal is further on than we realise. I believe that this will happen. Inshallah.