Man Group Acquires GLG Partners

Here's the press release:

Overview

Man Group plc ("Man") is pleased to announce that it has reached agreement on the terms of the recommended acquisition by Man of GLG Partners, Inc ("GLG") (the "Acquisition")

• The Acquisition values the fully diluted share capital of GLG at approximately USD1.6 billion and creates a diversified, world-leading alternative investment manager with approximately USD63 billion of funds under management

• The Man Board believes that the Acquisition provides compelling strategic and commercial benefits to Man Shareholders through:

  • The combination of two established investment management businesses with complementary investment strategies and the integration of sales, structuring and operations between the firms

  • A complementary geography of distribution franchises and investors, offering the opportunity to market products into new markets and to new investors

  • The potential of the Enlarged Group to add significant incremental funds under management through combining GLG’s investment offering with Man’s structuring and distribution expertise

  • The low correlation of performance between the quantitative investment style of Man and the discretionary investment style of GLG, providing greater stability in the combined performance fee prospects and the creation of new high margin products for distribution

  • The expansion of open-ended product offerings in onshore markets in single manager and combination formats to broaden and facilitate the raising of new assets in those markets

  • The subsequent organic build out of discretionary investment strategies by the combined business

  • A combined product offering, with an emphasis on liquid strategies, well positioned to benefit from the expected continued growth in onshore products globally

• Man has identified annual potential cost savings of approximately USD50 million with one third expected to be achieved in the financial year ending in 2011 and the balance expected in the first six months of the financial year ending in 2012

• The Acquisition is expected to be earnings accretive in the financial year ending in 2012 and earnings neutral in the financial year ending in 2011

• As at 31 March 2010, GLG had funds under management of approximately USD23.7 billion. GLG generated non-GAAP adjusted net income of approximately USD81 million for the year ended 31 December 2009

• GLG has a long history of strong and sustained investment performance - since its first fund was launched in 1997, GLG has achieved a 14.1 per cent. annualised return on its alternative strategies and a 7.3 per cent. annualised return on its long only strategies, outperforming its blended benchmark by 2.7 per cent. annually.

Dividend

• In light of the Acquisition, the Man Board has brought forward its decision regarding the level of dividend it intends to recommend for the year ending 31 March 2011. The Man Board intends to recommend a dividend of at least 22 cents per Man Share in total for that year

• The Man Board also confirms that it will recommend a final dividend of 24.8 cents per share for the year ended 31 March 2010, giving a total dividend of 44 cents per share for the year as previously announced on 24 March 2010.

Key Terms of the Acquisition

• The Acquisition is structured as a cash offer to the GLG Public Stockholders and a share offer to the GLG Principals

• The Acquisition will be implemented by way of a merger, which is governed by the Merger Agreement, and a share exchange, which is governed by the Share Exchange Agreement

• Pursuant to the Merger, GLG Public Stockholders will receive USD4.50 in cash for each share of GLG Common Stock, representing a premium of approximately 55 per cent. to the GLG Closing Price on 14 May 2010, being the last Business Day prior to the date of this announcement

• Pursuant to the Share Exchange and applying the Announcement Date Exchange Ratio, the GLG Principals (being Noam Gottesman, Pierre Lagrange and Emmanuel Roman, together with their related trusts and affiliated entities, and two limited partnerships that hold shares of GLG Common Stock for key individuals who are participants in the GLG equity participation plan), will receive 1.0856 New Man Shares for each of their shares of GLG Common Stock, valuing each such share of GLG Common Stock at USD3.50. In the event that the value of the shares of GLG Common Stock under the Share Exchange at completion of the Acquisition would exceed USD4.25, the number of New Man Shares issued to the GLG Principals will be reduced proportionally to maintain a maximum value of USD4.25 at Closing

• Other key terms of the Acquisition include the following:

  • Each of the GLG Principals (except for the two limited partnerships) will enter into lock-up agreements at Closing in respect of their New Man Shares for a period of 3 years from the Closing Date (subject to a right of each of them to dispose of up to one third of the New Man Shares which are subject to such agreements after the second anniversary of the Closing Date and to certain customary exceptions from the lock-up)

  • The Acquisition is expected to close by the end of September 2010

  • On the Closing Date, GLG will become a wholly owned subsidiary of Man

  • Closing is conditional upon the GLG Stockholder Approval, the Man Shareholder Approval, regulatory approvals (including approved by the FSA) and the other conditions described below

  • The cash consideration payable under the Merger will be funded by Man’s existing cash resources

Commenting on the Acquisition Jon Aisbitt, Chairman of Man, said:

'I am delighted to announce Man's proposed acquisition of GLG to create a diversified, world-leading alternative investment manager with USD63 billion in funds under management. It is central to Man's stated strategy of acquiring high quality discretionary investment management capability to broaden our range of diversified, liquid strategies for the benefit of our investors. The combination of the two businesses aligns the interests of both firms' fund investors, management and shareholders and creates a well capitalised industry leader'.

Peter Clarke, Chief Executive of Man, said:

'Today we have announced a transaction with GLG which positions Man as the industry leader in liquid, alternative investment strategies. The combination will provide comprehensive and compelling investment solutions to our investors worldwide, meeting investor demands head on and providing the acumen and flexibility investors are seeking in today's rapidly changing markets.

The fit between the two businesses is excellent; across investment strategies, geography and investor base. Man's quantitative and multi-manager expertise complements GLG's long track record in discretionary investment strategies, and both firms focus on liquid, transparent and dynamic trading. The structure of the transaction allows us to retain vital focus and commitment to performance whilst integrating Man's leading structuring and distribution capabilities to the advantage of investors and shareholders alike. We have deployed surplus capital in an earnings enhancing transaction to access savings, balance our investment strategies, and created a powerful business from which we can grow organically.

The commitment of the principals of GLG and their enthusiasm for the combination is evidenced by their receiving all consideration in Man shares, and undertaking to hold those shares for a number of years. I am delighted to be working with them as senior executives in Man as we build out from what we have created, and to welcome all of GLG's partners and employees into Man'.

Noam Gottesman, Chairman and Co-CEO of GLG commented that:

'This is a transformational step for 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 recommended approval 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'.

JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News