AC Milan buyout delayed again as PRC stops money from leaving China
Media tycoon owner Silvio Berlusconi agreed in August 2016 to sell the iconic Italian football club to a Chinese consortium for US$825.4 million but the takeover has been postponed on several occasions, as reports confirm one of the Chinese investors has failed to obtain government permission to move funds out of China
The sale of AC Milan to a Chinese consortium, scheduled to be finalised on March 3, could be delayed until the end of the month, a source close to the deal told Agence France-Presse on Wednesday.
Milan’s media tycoon owner Silvio Berlusconi agreed in August 2016 to sell the club to Sino-Europe Sports in a deal that values the Serie A giants at 740 million euros (US$825.4 million). But the takeover has been postponed on several occasions as the finances for the deal remain unsecured.
“The Chinese consortium has asked to postpone the signing by a month,” the source said. “That should be possible with the payment of a new installment of 100 million euros.”
Italian media has reported that the Chinese consortium, which has already paid out 200 million euros, was encountering difficulties after the withdrawal of one of its investors.
The La Repubblica newspaper confirmed that one of the Chinese investors due to have paid out around US$90 million had withdrawn because it failed to obtain permission to move funds out of China.
According to the UK’s Financial Times, Chinese overseas deals worth almost US$75bn were cancelled last year as China attempts a regulatory clampdown by restricting foreign exchange acquisitions.
The clampdown comes as the value of the yuan deteriorates and money continues to flood out of China with companies and high net worth individuals moving quickly to get their reserves offshore.
China saw up a record capital exodus last year causing regulators to vow to curb “irrational” acquisitions, scrutinise any purchases of around US$1bn or more or ones that are outside an investor’s core business. Especially targeted are any overseas deals involving land, hotels, the film industry and entertainment assets.
The purchase of an Italian football club would be well within the scope of the regulator’s investigation.
Milan’s neighbors and bitter rivals Inter Milan are already under Chinese ownership and become the first Serie A club to fall under Chinese ownership after Suning Holdings Group acquired a majority share of the club in 2016 for a reported US$250 million.
Suning completed the deal with Inter before the 2016 regulatory clampdown came into full force and also avoided Chinese capital controls by purchasing Inter through a Luxembourg based company, Great Horizon.
Current AC Milan owner Silvio Berlusconi, who earlier stated that a condition of the sale was that the new owners invest at least US$400 million in the club over the next two seasons, seems determined to keep the Chinese deal on track, with AC Milan scheduling a shareholders’ meeting for Friday and a press conference for Saturday.
The famously forthright Gazzetta dello Sport remained less optimistic. “It’s like a joke,” wrote the sports daily that was, in 2016, the most widely read newspaper in Italy.
“One of those jokes that doesn’t make you laugh.”