New York-based Rithm Capital, the parent company of Newrez, has received the blessing of Sculptor’s founder Daniel S. Och and his group to acquire the asset management firm for $719 million, representing a 14% increase over the original bid.
The support comes three months after the deal was made public on Jul. 24. After the announcement, Rithm faced competition from a group of investors, including Boaz Weinstein, Bill Ackman, Marc Lasry and Jeff Yass, resulting in a dispute among Sculptor’s shareholders.
In early October, Och and his group filed a lawsuit opposing the deal, saying it aimed to protect current CEO Jimmy Levin rather than maximize shareholder value.
However, the companies disclosed on Friday they had amended the merger agreement. Rithm will pay $12.70 per share to Sculptor’s Class A shareholders, still lower than the $13.50 recently offered by the Weinstein group. However, it is higher than its previous offers of $11.15 and $12.
According to the amended agreement, Rithm will waive Sculptor’s client consent condition concerning all Sculptor funds, provided that the closing of the deal occurs on or before Nov. 17.
The companies announced that “Daniel S. Och and other former EMDs have executed a transaction support agreement under which they will vote their shares, representing an aggregate of approximately 15.2% of the outstanding Sculptor voting shares, in favor of the transaction. The group has also agreed to dismiss their pending litigation with prejudice.”
Following the group’s support, the acquisition is expected to close shortly after the Sculptor stockholders’ meeting scheduled for Nov. 16.
On Thursday, Michael Nierenberg, chairman, CEO and president of Rithm, told analysts that he expects the deal to close in the fourth quarter of 2023. He added that there’s “a lot of press around” the acquisition, but Rithm is “excited to get this thing wrapped up.”
Nierenberg commented on the deal after Rithm reported a $194 million GAAP net income in the third quarter of 2023 — lower than the $357.4 million the prior quarter.
The deal will bring to Rithm Sculptor’s $34 billion of assets under management, including real estate, credit and multi-strategy investing spectrum. It is part of the firm’s plan to become a leading global asset manager.
Citi acted as the exclusive financial advisor to Rithm. PJT Partners was the financial advisor to the Sculptor’s special committee. The sculptor’s financial advisor was JP Morgan Securities LLC.
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