Diversified asset manager Sculptor Capital Management’s (US:SCU) stock was rewarded with a strong 17.2% rally to finish the week on Friday following news that the investment manager formed a special committee to explore potential interest from third parties regarding a potential transaction.
The latest development follows a lawsuit that saw former executive managers including Co-Founder Daniel Och who filed a books and record lawsuit against the company in the Delaware Court of Chancery. In agreement with this week’s development and committee formation, the parties have reached a settlement deal to dismiss the latest court actions.
The company has reportedly received acquisition interest from an undisclosed party and decided to form a committee solely of independent directors to explore options that will maximise value for shareholders.
As part of the committee formation, Sculptor reached out to Daniel Och and other former executive managing directors who agreed that the latest resolution would be beneficial to the process initiated by the committee for the benefit of shareholders.
Daniel Och commented on the development stating “We are pleased that the Board has formed a Special Committee that is dedicated to exploring potential interest from third parties in a transaction with the Company, and we will be supportive of a vigorous, independent, and thorough process that puts shareholders first”
The M&A interest comes at a time when Sculptor’s shares are trading -55% lower over the year with shares trading back at lows seen during the beginning of the pandemic.
Sculptor kept PJT Partners in its court as a financial advisor to any potential transaction with Latham & Watkins as its legal counsel. The committee also decided to retain JP Morgan to act as a financial advisor to the company.
While there is no assurance that any transaction will be announced, it does confirm that SCU is getting interest from potential suitors at the current market cap valuation of around $570 million.
Earlier in November, the asset manager reported third quarter financial results to investors.
SCU reported non-GAAP underlying distributable earnings of $0.6 million which declined 98% over the year from $35.3 million in 2021. The underlying result also declined from $32.1 million in distributable earnings generated in the prior quarter.
When digging deeper into the result, management fees declined marginally from $76.8 million in 2021 to $66.2 million during the quarter. The big difference came in the form of incentive income which fell sharply to $7.6 million from $27 million in 2021 and $44.6 million in the prior quarter.
During the same time period, adjusted net assets declined by -22% to $305.9 million from $392.6 million in the prior year. Total assets under management remained firm, declining 3.5% over the year to $36.11 billion.
Assets under management (AuM) has performed particularly well in the alternative assets class when compared to other asset managers who have seen asset valuations fade as they are correlated more with direct equity markets.
Fintel’s platform analysis highlighted the stock’s weak fund sentiment score of 37.63, which is bearish on SCU, based on lower levels of institutional buying activity in the stock relative to other companies. SCU ranks in the bottom 35% when screened against 35,654 other companies.
SCU has a total of 235 institutions on the register that collectively own 12.3 million shares of the float. Some of the largest institutions include: Russell Investments Group, Bank Of America Corp, Millennium Management Llc,, Miller Value Partners, Llc, and Geode Capital Management.
Investors will now eagerly wait with the hopes that a potential transaction may eventuate from discussions with the special committee…
This article originally appeared on Fintel
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