Billionaire Alisher Usmanov raised his stake in Arsenal Football Club to 21 percent Tuesday, prompting speculation that he may make a takeover bid for the club.
Red and White Holdings, a company owned by Kremlin-friendly tycoon Usmanov and his business partner, Farhad Moshiri, said in a statement that it was now the second-largest shareholder in Arsenal.
A spokesman for Red and White said the businessmen had acquired the shares in the English Premier League football club in a series of transactions.
In a separate deal earlier this month, Usmanov and Moshiri acquired a 14.58 percent stake from David Dein. Under the agreement, Dein, who was forced off Arsenal's board in April after clashing with them over investment possibilities, became chairman of Red and White. Usmanov later said he aimed to increase his stake in Arsenal to 25 percent. Investments made by Usmanov and Moshiri to date are said to be around ?110 million ($220 million).
Geneva-based diamond trader Danny Fiszman is the club's largest shareholder, with a 24.11 percent stake. Other major shareholders include Lady Nina Bracewell-Smith, with a 15 percent stake, and U.S. billionaire Stan Kroenke, with a 12.19 percent stake.
Tim Paynton, board director of the Arsenal Supporters' Trust, which has a 3 percent stake in the club, said Red and White acquired the shares from London-based hedge fund Lansdowne Partners and Birol Nadir, son of controversial Turkish-Cypriot businessman Asil Nadir.
Lansdowne Partners, which is reported to own a 3 percent stake, was unable to comment Tuesday.
Small shareholders currently hold between 11 percent and 12 percent.
"They are now quite pivotal," Paynton said. "For investment reasons, it is unlikely that they would sell."
Under British takeover law, Usmanov would be obliged to begin a formal takeover for the club if his combined stake reached 29.9 percent, although he has said he has no plans to make a hostile bid.
Some insiders believe that he is only biding his time, however.
Under an April "lockdown" agreement, Arsenal directors are prohibited from selling their shares before April 2008. The agreement was drawn up to fend off an anticipated takeover bid from Stan Kroenke.
Fiszman has repeatedly said he does not intend to sell and that he will retain his stake beyond the April 2008 deadline.
Fiszman sold around 1 percent of his holding for ?4 million to Kroenke earlier this year, taking his stake to below 25 percent. He also sold his London home and moved to Switzerland, which would allow him to avoid paying taxes on capital gains in Britain if he chooses to unload his remaining interests in the club.
British media reports over the weekend suggested that Kroenke might be willing to sell his stake.
Usmanov's march on the prestigious club has been viewed with some contention.
"In the back of everyone's minds will be the question: Where did this money come from?" said Harry Philp, managing director of Hermes Sports Partners.
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