British hedge fund firm Man Group is to acquire rival GLG Partners in a deal worth GBP1.1bn (USD1.6bn).
Following the conclusion of the acquisition, which has been structured as a merger and will see GLG’s ordinary shareholders receive USD4.55 per share – a 55 per cent premium on the firm’s closing price on Friday – the combined group will have assets of approximately USD63bn.
The proposed acquisition will be made through two concurrent transactions: a cash merger under a merger agreement entered into among GLG, Man and a Man merger subsidiary; and a share exchange under an agreement entered into among GLG’s principals – Noam Gottesman, Pierre Lagrange (pictured) and Emmanuel Roman, together with their related trusts and affiliated entities – and two limited partnerships that hold shares for the benefit of key personnel who are participants in GLG’s equity participation plan and Man.
Following the unanimous recommendation of a Special Committee of independent and disinterested directors, the Board of Directors of GLG has unanimously approved the merger and share exchange agreements and is recommending to GLG’s stockholders that they adopt and approve the merger agreement and approve the merger.
Immediately prior to the closing of the merger, under the terms of the share exchange agreement, Man will acquire all of the common stock of GLG held by the principals and the equity participation plan partnerships in exchange for Man ordinary shares at an exchange ratio of 1.0856 Man shares per GLG share. Based on the closing prices of GLG and Man stock on May 14, 2010, the exchange ratio represents a value of USD3.50 per GLG share. The share exchange is subject to a cap on the value of Man shares to be received of USD4.25 per GLG share.
“This is a transformational step for GLG,” says Noam Gottesman, Chairman and Co-CEO of GLG. “We have known Man for many years and can be certain that our two businesses are highly complementary, both focused on delivering long-term performance but each with differing client bases and uncorrelated investment strategies. The combination of Man’s outstanding distribution and structuring capabilities together with our industry leading investment teams will benefit all stakeholders, particularly investors in our funds whose interests will be exceptionally well served from within the combined group. The independent committee of our Board has unanimously recommended acceptance of the cash merger to our shareholders, and as a management team we are looking forward to working with our new colleagues at Man following the close of this transaction.”
The completion of the share exchange and the merger are conditioned on each other. The proposed transaction is subject to customary closing conditions, including GLG and Man shareholder approvals and regulatory approvals. In addition, the transaction is subject to the approval of the merger and the merger agreement by holders of a majority of the outstanding shares of GLG’s voting stock (other than the GLG principals, Man, GLG or any of their affiliates) at a meeting of stockholders to be held on a date to be announced.
Finally, pursuant to the terms of the merger agreement, GLG will make a cash offer to purchase all outstanding warrants for USD0.129 per warrant, the closing price for the warrants on the NYSE on May 14, 2010. The closing of the offer to purchase will be conditioned upon the completion of the merger. Upon the effective time of the merger, the warrants will become exerciseable for the right to receive the merger consideration.
The acquisition transaction is expected to close in the third quarter of 2010 and following the acquisition GLG will be a wholly owned subsidiary of Man. The principals will also enter into lockup agreements on the Man shares received in the transaction.
Moelis & Company acted as financial advisor to the Special Committee of GLG’s Board of Directors. Goldman Sachs acted as financial advisor to GLG. Perella Weinberg Partners served as financial advisor to Man.