Hedge funds: News
GLG in merger deal with Freedom 28/06/2007
Author: Stuart Fieldhouse
GLG Partners, the UK-based hedge fund giant with gross assets under management of over $20 billion, said it was planning to access the public markets through a reverse acquisition transaction with Freedom Acquisition Holdings.
The transaction values GLG at approximately $3.4 billion based on Freedom's closing price on June 22, 2007, and has been unanimously approved by the board of Freedom.
Under the terms of the agreement, the owners of GLG will receive from Freedom $1 billion in cash and 230 million shares of Freedom common stock on a fully diluted basis. The transaction is subject to Freedom shareholder approval, regulatory approval and other customary closing conditions. Assuming these conditions are met, GLG anticipates completing the transaction early in the fourth quarter of this year.
The combined company will be named GLG Partners, Inc. Shares of the combined company are expected to trade on the New York Stock Exchange under the ticker symbol "GLG" upon consummation of the transaction. GLG will also explore the merits of a dual listing in Europe. Based on the closing price of Freedom's shares on Friday, June 22, 2007, Freedom's shareholders will own approximately 28% and current GLG equity holders will own approximately 72% of the combined company's shares on a fully diluted basis. Upon completion of the transaction, GLG's equity holders have committed to reinvest approximately 50% of their after tax cash proceeds into GLG's funds at full fees.
GLG is the largest independent alternative investment manager in Europe and the 11th largest alternative asset manager in the world. The firm has built a highly scalable investment platform, infrastructure and support system, which represents a combination of investment talent, cutting-edge technology and rigorous controls and risk management. It currently manages over 40 funds, as well as managed accounts for high net worth individuals and institutions, using both alternative and long only strategies and products. These strategies and products have generated substantial absolute returns since inception, during periods of both supportive and difficult market conditions.
"This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets, including the US, Middle East and Asia," said Noam Gottesman, Founder, Managing Director and Co-CEO of GLG. "Accessing the public markets through Freedom allows GLG to take full advantage of our highly scalable infrastructure as well as our recent growth and track record of success to expand our client relationships and distribution capabilities. In addition it will provide us with a publicly traded equity currency with which to compete for, retain and incentivize the most talented and sought after professionals in our industry and pursue our growth strategies."
In order to finance the acquisition of GLG, Freedom will use the proceeds from its initial public offering and borrow the balance (up to $570 million) from a committed third party lender to obtain the $1 billion of cash necessary to pay the cash portion of the purchase price. In addition, Freedom and its subsidiaries will issue 230 million shares of common stock on a fully diluted basis valued at $2.4 billion (based on the closing price of Freedom's shares on Friday, June 22, 2007) to the GLG equity holders.
GLG also confirmed that Istithmar and Sal. Oppenheim have each entered into agreements to acquire 3% ownership positions in GLG and to invest into various GLG managed funds. These transactions are expected to close in July 2007. Both Istithmar and Sal. Oppenheim have purchased their ownership interests from a former principal of GLG.
Istithmar, an investment vehicle of the Government of Dubai in the United Arab Emirates, was established in 2003. It is headquartered in Dubai, with offices in Shanghai and New York. Founded in 1789 and based in Cologne, Sal. Oppenheim is one of Europe's leading private banks with approximately €138 billion in assets under management.
Commenting on these strategic investments Gottesman said "We welcome these two experienced and highly respected world-class investors. In addition to their ownership interests, Istithmar and Sal. Oppenheim will help to support the further development and expansion of our business in the Middle East and Europe."
