The sale of alternative asset manager Sculptor Capital Management (NYSE:SCU) just got interesting, with a group of high-profile investors led by Saba Capital’s Boaz Weinstein making a rival offer of more than $12 per share, which is better than the $11.15 per share offer made by real estate investment firm Rithm Capital (NYSE:RITM) in late July. As per the Wall Street Journal, the group led by Weinstein includes Pershing Square Capital’s Bill Ackman and Avenue Capital Group’s Marc Lasry.
High-Profile Investors Bid for Sculptor
In late July, Sculptor accepted a bid by Rithm for an aggregate amount of $639 million or $11.15 per share, which reflected a premium of 18% to SCU’s closing price.
However, last Wednesday, Daniel Och, who is Sculptor’s founder and one of its major shareholders with a 12.5% stake, sent a letter to the board opposing the deal with Rithm. Och argued that the $639 million sale to Rithm undervalues the business. He added that lack of proper oversight has repeatedly destroyed shareholder value.
The group of high-profile investors headed by Weinstein presented an offer earlier during the sales process, which was turned down by Sculptor. The revised offer of more than $12 per share comes after the founder Och’s opposition to the Rithm deal. It is worth noting that these prominent investors intend to use their personal funds to finance the Sculptor acquisition, not their firms’ cash.
Reacting to the offer by the Weinstein group, Sculptor issued a statement on Sunday, saying, “Though this latest bid’s headline valuation is higher than the Rithm transaction, this proposal only includes committed financing for less than half of the amount required to consummate the transaction.”
Overall, Sculptor argued that the Weinstein group did not demonstrate adequate funding for any of its bids. However, the Weinstein group is reportedly confident about having sufficient financing for the deal. As per the agreement with Rithm, Sculptor can terminate the deal if it receives a superior proposal. Nonetheless, Sculptor might have to pay Rithm a fee of $16.5 million if it backs out.
Sculptor, the largest publicly traded hedge fund in the U.S., has been in focus in recent years due to an African bribery scandal, the elevated compensation package of its CEO, and a legal battle with its founder Och.
Sculptor shares have risen 36% year-to-date.
