Monday, May 17, 2010

GLG Partners accepts a "liquidity event" from Man group (GLG)

Hedge fund manager GLG Partners (GLG) has agreed to a takeover by German asset manager Man Group, for $4.50 per share.  That's a pleasant $50% premium to Friday's close, yet a massive discount to the IPO price of just a few years ago.

Despite that ugly chart above, it's better than the alternative for some hedge fund managers...usually when they close up shop, well, "that's it."  In this case, management and employees (over 50% of the shareholders) are exiting at a $1.1billion market value.  Lest current shareholders think they're getting a raw deal, management actually agreed to 3year lockups (before they can sell Man Group stock) and accepted stock valuing their shares at less than what other shareholders are receiving in the deal.  Sounds like (1.) they're sticking around for a while and (2.) something isn't looking too bright for GLG as a stand-alone firm...

From the release:
Under the terms of the merger agreement, Man will acquire the outstanding common stock of GLG not subject to the share exchange for $4.50 per share through a merger with a wholly owned subsidiary of Man. The $4.50 per share cash consideration to be paid in the merger represents a 55% premium to the closing price of GLG’s common stock on May 14, 2010, the last trading day prior to the announcement of the execution of a definitive merger agreement. Immediately prior to the closing of the merger, under the terms of the share exchange agreement, Man will acquire all of the common stock of GLG held by the principals and the equity participation plan partnerships in exchange for Man ordinary shares at an exchange ratio of 1.0856 Man shares per GLG share. Based on the closing prices of GLG and Man stock on May 14, 2010, the exchange ratio represents a value of $3.50 per GLG share. The share exchange is subject to a cap on the value of Man shares to be received of $4.25 per GLG share.
Consider this.  GLG Partners, the acquiree, is selling for $1.1billion and they manage about $23.7billion, so the deal price is about 4.6% of assets under management.  Compare that to what they paid for Societe General's Asset Management unit, and it looks like they're right to cash out while they still can!

From GLG's recent 10k:

On December 19, 2008, we entered into (i) an agreement with Société Générale Asset Management (“SGAM”) to acquire Société Générale Asset Management UK (“SGAM UK”), Société Générale’s UK long-only asset management business, for £4.5 million (approximately $6.5 million) in cash and (ii) a sub-advisory agreement with SGAM UK related to approximately $3.0 billion of AUM. On April 3, 2009, we completed the acquisition of SGAM UK’s operations, which had approximately $7.0 billion of AUM as of that date, and its investment and support staff, based primarily in London, and thesub-advisory agreement was terminated.

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