KEY executives at hedge fund GLG Partners will be locked into their new home at listed investment giant Man Group using $560m (£387m) of deferred shares.
Following Man’s surprise $1.6bn takeover of the American outfit, 40 GLG traders including Noam Gottesman, Pierre Lagrange and Manny Roman will have their equity stakes frozen for three years. The bulk of the stock – $482m – is owned by the three senior men.
Man and GLG yesterday hailed the “transformational” combination of the firms, which will bring Man’s assets under management up to $63bn. Man is excited about the prospect of selling GLG’s long/short products into Asia, while GLG has seen its share price slump by nearly two thirds since its New York flotation three years ago and is said to have been looking for a new berth.
In an unusual deal structure, public shareholders in GLG, which has Jon Aisbitt as chairman, received $4.50 per share, a 55 per cent premium to last week’s closing price, while employee shareholders received $3.50 per share. Man boss Peter Clarke said the two firms’ investment teams would operate separately but back-office functions would be merged, saving $50m a year. The deal is expected to be earnings neutral in 2011 and positive the year after.
Clarke said the move represented “an enormous opportunity”, adding: “Both of us will achieve more together than we would have individually.”
GLG co-chief executive Roman said: “There’s no pride or ego in this. It’s just the right thing to do.”
One Man shareholder told City A.M. he was keen on the idea of using Man’s salesforce to push GLG’s funds. But the market was less enthusiastic. Man’s shares dropped 8.9 per cent to 201.9p as traders digested GLG’s price tag of 20 times last year’s earnings.
MAN GROUP AND GLG ADVISERS
MAN GROUP hired Perella Weinberg Partners, the boutique investment bank with offices in New York and London, to lead its chase of GLG.
Heading Perella Weinberg’s team were Philip Yates, Graham Davidson and Toby Rolls.
Yates was previously head of M&A at Merrill Lynch and has 19 years’ experience in investment banking.
Davidson, also a former Merrill Lynch man, is a veteran dealmaker who has worked on transactions across all industry sectors in Europe, while Toby Rolls has closed transactions in the UK and the US.
Man’s corporate broker on the takeover was Credit Suisse. George Maddison, who has played an important role organising Prudential’s $21bn (£14bn) rights issue, is on the account, as is Stuart Field.