Sculptor sticks with Rithm deal after sweetened offer for hedge fund

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Sculptor Capital Management is sticking with a deal from Rithm Capital, which agreed to boost its offer price for the firm, even as the hedge fund fields takeover interest from a rival group of bidders led by investor Boaz Weinstein amid an ongoing bitter dispute with its founder, Daniel Och.

According to newly revised terms on Thursday, Rithm will pay Sculptor shareholders $12 a share, a boost of 7.6 per cent from a previous deal signed in July. The aggregate purchase price is now set at $676mn, the company said.

After the original agreement was announced, Och publicly challenged the transaction, accusing the board of choosing a deal that protected the interests of current Sculptor chief executive Jimmy Levin, a one-time protégé of Och. The company insisted its independent directors had chosen the best transaction for all shareholders.

Och, who is among Sculptor’s largest shareholders, claimed that other bidders had been stymied by Sculptor. That included the group led by Weinstein, which includes billionaire hedge fund manager Bill Ackman.

Och, Weinstein and Sculptor all declined to comment.

According to securities filings from Thursday, Weinstein has made eight separate offers for Sculptor since August but the company has rejected them all over concerns about financing and the group’s ability to close a transaction.

Thursday’s amended deal still falls short of the nominal price offered by the Weinstein-led group, which is prepared to pay as much as $13 a share, according to the filing. That price is conditional on the group being able to meet Och and securing approval from a certain amount of Sculptor’s existing investors to the change in management.

Sculptor’s stock price was up 2.1 per cent to $12.23 in morning trading in New York.

Sculptor shareholders will vote on the Rithm deal on November 16. In exchange for boosting its takeover price, Rithm has negotiated a higher break-up fee, set at $20mn, should Sculptor decide to accept a rival bid from Weinstein or any other group.

The latest deal now only requires a majority of all common shareholders to vote in favour of the transaction rather than a previous condition of a majority of non-insider shareholders. The revised voting standard comes as the latest deal will no longer allow company insiders to roll over their separate private partnership units into Rithm.

Weinstein, whose investment firm Saba Capital already owns a stake of slightly less than 4 per cent in Sculptor, has indicated that he will launch a tender offer to buy shares from shareholders once his standstill agreement expires on December 22 if the board does not engage.

Rithm is a former affiliate of Fortress Investment Group and specialises in real estate.

Sculptor had initially launched a sale process in 2022 after settling litigation with Och who had accused the board of excessively paying Levin with a 2021 pay package of $145mn.

Och, a former star trader at Goldman Sachs, co-founded what was then known as Och-Ziff Capital Management in 1994 as a hedge fund investing across debt, equity and global macro. Its assets eventually peaked at $50bn but disappointing results followed the financial crisis. 

In 2016 the group paid $412mn to settle charges of bribery in several African countries, which it now says led to Och’s removal as chief executive and Och-Ziff’s rebranding as Sculptor.

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