Dublin financier Mr Dermot Desmond will become the biggest shareholder in Celtic football club with a 19.8 per cent interest following the sale by Fergus McCann of the bulk of his 50.3 per cent shareholding in the Scottish club.
Between ordinary shares and preferential shares - which convert into ordinary shares next year - Mr Desmond already has a 13.8 per cent stake in Celtic. Increasing this stake to 19.8 per cent by buying 2.8 million of the shares being sold by Mr McCann will cost Mr Desmond around £7.8 million sterling (€12.16 million).
While there were some suggestions that Mr Desmond may be moving into a position to make a bid for Celtic, market sources said that this is unlikely given the strong institutional take-up to the shares sold by Mr McCann. Mr Desmond was not available for comment.
The McCann shares are being sold at 280p sterling - a 10 per cent discount on Friday's closing price - with 4.4 million being placed with institutional investors.
A further 9.9 million shares have been conditionally placed with institutions subject to the take-up from shareholders, season ticket holders, players and staff.
These 9.9 million shares are first being offered to existing Celtic shareholders. Any shares not taken up by existing shareholders will then be offered to shareholders who want to increase their allocation.
At that stage, any of the 9.9 million shares left unsold will be offered to Celtic season ticket holders in Ireland and Britain. After that any unsold shares will be offered to Celtic players and staff.
Depending on the take-up from shareholders to the offer for sale, Mr McCann has given a commitment to invest up to £1.5 million sterling in a football academy at Celtic.
The fact that the institutions have, in effect, underwritten the offer for sale to shareholders indicates that they believe that Celtic has the potential to generate strong profit growth in the years ahead. Analysts believe that there is huge scope to boost Celtic's income from merchandising and match-day sales. Fans only spend an average of £3 each at the club on match days compared to the £15 each spent by Manchester United supporters.
Mr McCann resigned as Celtic chairman at the end of last season after effectively saving the club from liquidation. At the time he invested in Celtic, the club was close to collapse, but recovered strongly - at least in financial terms - boosted by the funds raised when the club floated on the AIM market in London.
It was at that time that Dermot Desmond invested £4 million in Celtic, an investment that has increased hugely in value as Celtic's fortunes have steadily revived.
Celtic shares were floated on AIM at the equivalent of 60p - the shares were split 100 for one three years ago - and prior to yesterday's announcement were trading at 310p sterling.
Mr McCann has said in the past that he favoured the widest possible ownership of Celtic when he finally decided to sell his shares. That plan led Mr McCann to reject an approach to buy Celtic last year by a consortium including former Celtic player Kenny Dalglish, Simple Minds' Jim Kerr and, reportedly, U2's Bono.
The sale of virtually his entire shareholding will realise over £40 million sterling for Mr McCann. He stoutly defended his windfall, stating yesterday: "Everyone else has done better than Fergus McCann. Everyone who bought shares at £60 now knows they are worth £317 and they did not put in the effort or the hard work for five years that I did. Nor did I take a £200,000-a-year salary that Allan MacDonald now enjoys. Nor did they face a £2 million bill, which this exercise is costing me. Nor did I take any dividend out of the club."
Celtic's financial transformation in the five years since Mr McCann took control has been dramatic. In that period, turnover has risen from £10.4 million sterling to £33.8 million while operating profits have risen from £669,000 to £6.8 million.
Over £18 million has been invested in players over and above transfer income, while the Parkhead stadium - in which £41 million has been invested - is now the biggest club stadium in Britain, with a capacity of 60,506. Average league attendances last season were over 59,000 and season ticket sales totalled over 53,000.
Success on the playing front has been more modest, and Celtic has mostly had to play second fiddle over the past five years to archrival Glasgow Rangers. Celtic did win the Scottish Premier League in 1997/98, but otherwise the club has been unable to challenge Rangers' domination of Scottish football over the past five years and has also had little success in any of the European club football competitions.
