It’s not every day a stock doubles in value. That’s what happened to Greenhill & Co. (NYSE:GHL)—and then some! What sent Greenhill to the moon was news that Mizuho Financial Group (NYSE:MFG) agreed to buy the company for a hefty sum.
Mizuho is buying Greenhill for straight cash at $15 per share. That ultimately values Greenhill at about $550 million, including its current debt. As for any layoffs, there don’t seem to be any. In fact, Mizuho plans to keep Greenhill’s leadership, though at different positions. Scott Bok, the CEO of Greenhill, will instead shift to “chairman of mergers, acquisitions, and restructuring.” Most, if not all, of Greenhill’s 370 employees in 15 locations will continue to operate. The $15 per share Mizuho offered was more than 120% above where Greenhill closed on Friday. That’s a hefty premium, but possibly for good reason.
First, as noted by Mizuho Securities USA president and CEO Jerry Rizzieri, Greenhill was trading around that price back in February. With regional banks in open decline following the events of Silicon Valley Bank, among others, the February price may have represented a fairer deal. Rizzieri actually noted it was “paying a fair price for a premium brand.” It also gives Mizuho further access to United States banking operations, something it’s wanted for some time now.
As good a deal as this is, hedge funds will likely not be happy. Hedge fund sentiment on Greenhill & Co. is currently on the lower end of Neutral. Further, hedge funds reduced holdings of Greenhill by 81,300 shares last quarter.
