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AC Milan

The €500m clause that allowed RedBird to beat Investcorp to Milan takeover

A clause that RedBird Capital were happy to agree to seems to have made the difference in the talks with Elliott Management over buying AC Milan, a report claims.

According to what is being reported by MilanNews, the fact that RedBird consented to an ‘earn-out’ clause made the difference during the negotiations. Through this clause, the seller – in this case Elliott – will constrain the price of the club also based on the potential for growth.

In essence, there is a fixed figure, which will remain regardless, and a variable price which is the earn-out part, and that will vary according to the objectives achieved in a given period of time by the new owners RedBird.

Translated into practical terms, the fixed figure is €1.3bn as agreed between the two parties, while the earn-out should reach up to €500m for a potential transaction worth approximately €1.8bn.

It is likely that the new stadium is a motivator behind the agreement, while the report adds that the new asking price and increase in requests from Paul Singer’s fund seems to be linked also to the evaluation of Chelsea.

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