Sculptor Capital Management Inc. said major shareholder and founder Dan Och and his group agreed to a sweetened deal from Rithm Capital Corp., in what may be the deciding bid for the struggling hedge fund.
Rithm’s amended offer increased the bid to $12.70 a share from $12.00, Sculptor said in a statement Friday. It values Sculptor at about $720 million.
While shareholders still have to vote on the deal, Och’s support potentially puts an end to a bidding war that pitted Rithm against Saba Capital Management founder Boaz Weinstein and a group of billionaires who most recently said they’d pay $13.50 a share.
“We are pleased to reach this amended agreement with Rithm, which delivers a highly attractive premium to Sculptor stockholders,” Sculptor’s board chair, Marcy Engel, said in the statement, adding that she appreciates the support of Och and the former executive managing directors who are voting with him.
Sculptor shares rose 2.1% to $12.65 at 12:32 p.m. in New York.
Rithm announced in July that it had reached an agreement to acquire Sculptor for $11.15 a share. Weinstein’s group, which includes billionaires Bill Ackman, Jeff Yass and Marc Lasry, increased its offer multiple times since making an initial unsolicited bid of $12.25 a share in August.
“We are pleased to have helped negotiate a better outcome for Sculptor shareholders,” Och said in a statement.
Weinstein didn’t return a request for comment.
Less Certainty
The main difference between the competing offers, other than price, was that Weinstein’s group planned to demote the firm’s head, Jimmy Levin, from his post as sole chief investment officer, while Rithm said it would keep the status quo.
While the Weinstein bids have always exceeded Rithm’s, Sculptor never deemed them to be superior.
Sculptor said the billionaire group’s bid brought less certainty of the deal closing, in part because of the need for a certain percentage of the firm’s hedge fund clients to agree to stay. Weinstein eventually reduced the client consent level to zero, meaning he would go through with the deal even if all the investors pulled their money. Even then, Sculptor continued to support Rithm’s bid.
Both sides have vied to win support from Sculptor founder Och, one of its biggest shareholders, who has been locked in a bitter feud with Levin, his onetime protege, over compensation.
The fight, which started before Och’s departure from the firm in 2019, has included multiple suits and personal attacks against Levin. The Sculptor founder ultimately agreed to Rithm’s offer after getting concessions over the CIO’s employment agreement with Rithm, and a boost in price closer to Weinstein’s bid.
Och and his group of former Sculptor executives will throw in their votes — 15% of the outstanding shares — behind the Rithm deal and drop a suit tied to the transaction.
Rithm amended its agreement with Levin, saying if he decides to leave the firm, he would forfeit unvested deferred compensation and retention awards, and face a 12-month non-compete agreement.
It also agreed to waive a condition that the firm’s hedge fund clients consent to the deal, as long as the transaction closes by Nov. 17, the day after the scheduled shareholder vote.
Weinstein still has a narrow path to victory, if he decides to take it. He could go back to Sculptor with yet another bid, and if the board deems it superior, Och could throw his votes behind the Saba founder.
Alternatively, if a Delaware judge sides with a Sculptor shareholder in a hearing slated for Nov. 9, then Weinstein could stage a tender offer for the hedge fund firm.
(Updates with quote from Och in 11th paragraph and path for Weinstein victory in last two paragraphs)
