Boaz Weinstein has again boosted his bid for hedge fund firm Sculptor Capital Management Inc., prompting Rithm Capital Corp. to weigh a sweetened offer of its own, according to people familiar with the matter.
A consortium of deep-pocketed investors led by Weinstein approached Sculptor more than a week ago with an offer of at least $13 a share, up from an earlier bid of $12.76, said the people, who asked not to be identified discussing confidential information.
Shares of Sculptor rose 5.4% to $12 in extended trading at 5:29 p.m. in New York, after Bloomberg reported on the latest bid.
The coalition also revised other terms in an attempt to address Sculptor’s concerns with its previous proposal. It agreed to go through with the transaction even if all investors in its biggest hedge fund reject it, the people said, although other clauses still remain. Rithm’s offer allows it to back out if more than 15% of Sculptor clients, as measured by fees paid, oppose the deal.
Rithm subsequently held talks with Sculptor about increasing its offer of $11.15 a share, or $639 million, the people said.
Representatives for Sculptor, Weinstein and Rithm didn’t comment.
In July, Rithm’s initial offer was accepted amid vocal opposition from Sculptor founder Dan Och, one of the firm’s biggest shareholders, as well as other former executives who have said they prefer Weinstein’s bid. In an Aug. 31 statement, former Chief Executive Officer Rob Shafir called Weinstein’s bid “clearly superior.” Other shareholders have sued the firm.
Sculptor, led by CEO Jimmy Levin, had said Weinstein’s offer is less attractive because of the risk that the firm’s clients would object to Weinstein’s move to replace him — thereby granting the group the option to back out of the deal. While Rithm plans to retain Levin, Weinstein’s group has said it would demote him from his position as sole chief investment officer.
The hedge fund firm hasn’t filed an updated proxy statement disclosing the revised Weinstein bid, nor its recent discussions with Rithm.
Weinstein’s group includes billionaires Bill Ackman, Marc Lasry and Jeff Yass. Their plan would be for Sculptor to become part of Weinstein’s Saba Capital Management, catapulting the firm into the ranks of the world’s biggest hedge fund managers.
Och had positioned Levin to take over of the firm, previously known as Och-Ziff, and paid him handsomely. But the two later fought over compensation and control. Och, who left in 2019, has been a critic of Levin’s pay ever since.
Rithm was formed in 2013 as New Residential Investment Corp., specializing in mortgage servicing rights. It rebranded itself last year amid a push into real estate and financial services. On Monday, Rithm announced it will buy Computershare Mortgage Services and some affiliated companies for about $720 million, financed in part by cash.
The firm, led by CEO Michael Nierenberg, had about $1.4 billion of cash and equivalents as of June 30, according to a regulatory filing.
(Updates share price in third paragraph, Rithm background starting in 12th.)
Author: Hema Parmar, Katherine Burton and Sonali Basak
