(Bloomberg) -- Boaz Weinstein sweetened his bid for Sculptor Capital Management Inc., boosting his price and conceding to so-called client-consent terms that had become a sticking point with the hedge fund firm. The shares jumped more than 7%.
The moves put pressure on Sculptor to consider his deal — the latest development in a saga that has captivated Wall Street as the two groups fight for the struggling company.
It also prompted 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.
The coalition also loosened its client-consent terms — essentially agreeing to go through with the transaction even if all investors in its two hedge fund strategies reject it, the people said. The clauses were a key concern Sculptor had with Weinstein’s previous bid. For Sculptor’s other two strategies, the clauses remain as agreed upon in July. Rithm’s offer, meanwhile, allows it to back out if more than 15% of Sculptor clients, as measured by fees paid, oppose the deal.
On Tuesday, a day after Bloomberg reported on the latest bid, shares of Sculptor rose 7.4% to close at $12.22, the highest since May 2022. Rithm dropped 3%.
Rithm has 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.
‘Right to Know’
Sculptor founder Dan Och and other former senior executives urged the firm to publicly disclose details about Weinstein’s revised bid, saying in an emailed statement Tuesday that “shareholders have a right to know.” They also reiterated their preference for Weinstein’s bid and that Sculptor should release Weinstein from non-disclosure agreements.
In July, Rithm’s initial offer was accepted amid vocal opposition from Och — one of the firm’s biggest shareholders — and the other former executives. 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 coalition 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 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 with Och group’s comments starting in ninth paragraph.)
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