After months of drama, Rithm closes deal to acquire hedge fund Sculptor

Rithm Capital Corporation Finally completed a transaction The acquisition of troubled asset manager Sculptor Capital Management Inc. dashed the ambitions of a hedge fund founder and delivered a 35% gain to shareholders.

Rithm said in a statement on Friday that Sculptor will be acquired for about $720 million, or $12.70 a share, ending a months-long battle that was punctuated by bids from rivals and lawsuits. It failed to derail the deal but pushed prices higher.

Rithm, which began as a company investing in mortgage servicing rights, is now a major player in the money management space with Sculptor’s $32.8 billion in assets.

For Saba Capital Management founder Boaz Weinstein, this ends his plans to bring his Sculptor funds under the Saba umbrella, which would have expanded his assets under management and catapulted him to the top of the industry.

The deal is a boon to Sculptor chief investment officer Jimmy Levin, who will keep his job and receive an annual salary of up to $30 million.

Levin said in the statement that Sculptor is “very excited to join forces with Rithm,” adding that the deal will bring “long-term success” to the company.

“Our team is energized and continues to deliver on our mission of delivering attractive returns to fund investors,” he said.

Rithm CEO Michael Nierenberg said in a statement that the deal is an “important milestone” for Rithm. “We are excited to bring our talented team together to create an exceptional global asset management business.”

long road

The tortuous road to completion of the deal dates back to 2017, when The battle between Sculptor founders Dan Och and LevinOher initially groomed the young man to lead the company, formerly known as Oher-Ziff, but changed his mind as the two feuded over the pace of succession and Levine’s pay.

Although Och left the company in 2019, he remains a majority shareholder and has been competing for Levin’s compensation. Sculptor locked himself out last November in an effort to resolve a legal dispute between the pair, a fight fraught with personal attacks.

In July, Sculptor said it had reached an agreement to be acquired by Rithm for $11.15 per share. Weeks later, it was revealed that Weinstein and a group of billionaire backers — including Bill Ackman, Marc Lasry and Jeff Yass —Want to acquire the company and will pay more to do so.

As summer turned to fall in New York, Weinstein and his team kept making higher offers, eventually reaching $13.50 per share. Caputo repeatedly returned to Weinstein and the billionaires, arguing that Risem’s offer was a better deal than theirs.

Due to a confidentiality agreement, Weinstein cannot talk about his offer to customers or shareholders. His plan, unlike Rithm’s, would demote Levin to sole CIO status. Och and other shareholders filed a lawsuit accusing the company of choosing Rithm’s lower bid to protect Levin’s interests. The company disputes this claim.

Late last month, Oher unexpectedly agreed to back Rithm after Rithm raised its bid to $12.70 per share and promised to adjust Levine’s employment contract.

Rithm has the shareholder voting rights needed to secure the deal.

Weinstein’s only remaining chance is this week’s dual court cases in Delaware and New York, which would have delayed a shareholder vote and given him a path to victory via a tender offer. The Delaware case was settled at the last minute and hours after a New York judge refused to delay the vote.

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