Dealmakers contacted investor Och to gauge interest in M&A deal for Sculptor -letter (updated)

Sculptor Capital Management

05/10/2022 13:58

(Updates with response from Sculptor)
    By Svea Herbst-Bayliss
       NEW YORK, Oct 4 (Reuters) - Billionaire investor Daniel
Och, who helped found Sculptor Capital Management, said
dealmakers have reached out to gauge interest in a potential
strategic transaction that would include replacing management,
according to a letter sent on Tuesday.
    Once known as Och-Ziff Capital Management, Sculptor is one
of only a handful of publicly traded hedge fund companies, and
Och said he and other founding partners have been contacted by
"third parties" in the last weeks.
    "Several ... have asked us whether the Company might be open
to a strategic transaction that would not involve current senior
management continuing to run the Company," Och wrote to the
Sculptor board of directors in the letter that was attached to a
regulatory filing.
    "I would support consideration of any transaction that would
benefit all the stockholders," Och, who remains a large
shareholder, wrote, adding "I am keeping all options on the
table."
    Sculptor's board wrote back to Och to say it has "always
been open to any avenue that enhances shareholder value" and to
request he immediately notify the company, with details, if
anyone should reach out to him about potential transactions. "We
are disappointed you have not done so to date," the letter said.
        The asset management industry has faced consolidation
over the last years as bigger players like BlackRock offer low
fee products that appeal to investors.
    Och's letter comes weeks after he accused his former firm in
a lawsuit of letting its chief executive, James Levin, wield
power over the board to extract "ever-escalating" pay despite
subpar performance.
    Levin, once Och's protege who joined Sculptor in 2006, was
paid $145.8 million last year when Sculptor earned $626 million
in revenue, according to regulatory filings. It oversaw $36.8
billion in assets as of July 1, down from more than $50 billion.
    Sculptor's shares, listed publicly in 2007, have lost more
than half of their value this year and closed at $9.40 on
Monday.
    Och said Sculptor, which he helped found in 1994, could be
an attractive target for a well-managed asset manager. 
    He said in the letter that he "may decide to have further
discussions with one or more of these third parties." The
company has distanced itself from the Och name several times and
changes its name to Sculptor 2019.
    Och warned the board against putting the interest of
management above those of shareholders, adding that any decision
should not be made on the basis of whether the current
management team would play any role after a potential
transaction.
 (Reporting by Svea Herbst-Bayliss
Editing by Nick Zieminski and Chizu Nomiyama)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))