Rithm Capital completes acquisition of Sculptor

Rithm is paying $719.8 million, up 14% compared to the original bid

New York-based Rithm Capital, the parent company of Newrez, announced on Friday it completed the acquisition of Sculptor Capital Management for $719.8 million. 

The deal was made public four months ago and created a dispute among investors to take the firm, leading Rithm to increase its price by 14% compared to the original bid. The transaction also created legal battles with Sculptor’s shareholders and founders, including Daniel S. Och, but the parties settled the cases in court.

In a special meeting on Thursday, Sculptor’s stockholders of 89% of the Class A common stock and 97% of Class B common stock voted in favor of the agreement with Rithm. They also approved the compensation to directors to consolidate the deal. As a result, Sculptor will be delisted from the New York Stock Exchange

Michael Nierenberg, chairman, CEO and president of Rithm, said in a statement that the company plans to “create a superior global asset management business focused on delivering significant, long-term value for our shareholders and fund investors.” 

Rithm announced on July 24 its plans to acquire Sculptor for $11.15 per share. After the deal was public, Rithm faced competition from a group of investors, including Boaz Weinstein, Bill Ackman, Marc Lasry and Jeff Yass. They offered $13.50 per share.

It resulted in Och and other founders filing lawsuits opposing the deal, saying it aimed to protect current CEO Jimmy Levin rather than maximize shareholder value.  

Rithm only received the blessing of Sculptor’s founder at the end of October after increasing its price to $12.70 per share. It had previously increased to $12 per share without success. 

Rithm reported a $194 million GAAP net income in the third quarter of 2023 — lower than the $357.4 million the prior quarter. The company targets transitioning from a real estate investment trust to a global asset manager. 

Sculptor is relevant to this plan because it will bring to Rithm $34 billion of assets under management, including real estate, credit and multi-strategy investing spectrum. 

Citi acted as the exclusive financial advisor to Rithm. PJT Partners was the financial advisor to the Sculptor’s special committee. The sculptor’s financial advisor was JP Morgan Securities LLC.   

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