Hedge fund Sculptor rejects offer from Weinstein

NEW YORK: Sculptor Capital Management received multiple takeover bids that were higher than the US$639mil (RM2.9bil) offer it ultimately accepted from Rithm Capital Corp last month, the latest twist in a deal that’s divided Wall Street.

Some of those offers valued Sculptor at more than US$700mil, according to a proxy statement Sculptor filed Monday.

The disclosure comes after reports that hedge fund giants Boaz Weinstein, Marc Lasry and Bill Ackman bid more than US$12 a share, topping Rithm’s US$11.15 per-share offer.

Of the higher-value bids, some were withdrawn, or were rejected by Sculptor because of burdensome conditions and because the suitor hadn’t secured financing. In one case, the firm’s co-founder Dan Och and other founding partners rejected a higher bid.

The report added more intrigue to a long-running feud between the firm’s management and founding partners including Och, who had contested chief executive officer Jimmy Levin’s pay packages.

Last week, Och and the founding partners slammed the deal with Rithm and said it “substantially” undervalued Sculptor.

In the proxy statement filed Monday, Sculptor revealed it was in contact with 70 interested suitors after the firm’s announcement last November that it was looking for a buyer. They included private and publicly traded alternative asset managers, financial services companies, a financial technology company and others.

On Jan 27, one bidder identified as “Bidder D” offered between US$11.75 and US$12.50 a share, the latter making it the highest price per share of Class A common stock the firm had been offered, the statement said.

On Feb 15, Bidder D revised the offer to US$12 but insisted that it wouldn’t go through with the deal without the support of Och and the other founding partners.

Compared to the offer from Bidder D, which had the cash to fund the deal, Rithm’s offered price per share was “an inferior price”, according to Sculptor’s calculations.

“Bidder D submitted the highest offer price with the fewest conditions to closing and indicated a willingness to pursue a short timeline to execution,” the proxy said.

In March, Och and the other founding partners refused to support the “Bidder D” deal, contending that it undervalued Sculptor and that its “compensation structure was the primary cause of what it viewed as insufficient valuation in the proposal,” according to the proxy statement.

Another bidder proposed US$12.25 a share, but didn’t produce evidence of having the debt or equity financing necessary to execute it and wanted to sell portions of the hedge fund’s collateralised debt obligation business, according to Sculptor.

The filing comes after the Wall Street Journal reported last Sunday on the rejected bid from Weinstein, Lasry and Ackman.

“This bidder has not demonstrated adequate committed funding for any of its bids,” the publicly traded hedge fund said in a statement, without identifying the bidders.

Sculptor didn’t identify the names of the bidding group in its statement, and said it “only includes committed financing for less than half of the amount required to consummate the transaction and underestimates the amount that would be necessary by several hundred million dollars.”

Och co-founded the firm formerly known as Och-Ziff before stepping down as chief executive officer in 2018.

Ackman declined to comment. Lasry, Weinstein and Och didn’t reply to requests for comment. — Bloomberg