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Man Group Agrees to Buy GLG
The hedge fund world opened this week to big news on Monday when Man Group announced it had agreed to acquire fellow hedge fund firm GLG in a deal that values GLG at $1.6 billion.

Terms of the deal call for the acquisition to be accomplished through two concurrent deals. Man will acquire the outstanding common stock of GLG for $4.50 per share. That represented a 55% premium on the closing price of GLG stock on May 14, the last trading day prior to the deal announcement.

GLG's shares trade under the GLG ticker symbol on the New York Stock Exchange. Investors cheered the news of the deal, sending shares up nearly 50% to $4.31 per share in mid-morning trading on Monday.

The second part of the deal calls for GLG's principals Noam Gottesman, Pierre Lagrange and Emmanuel Roman to receive shares in Man. The agreed upon exchange rate has been set at 1.0856 shares of Man for every one share of GLG, the announcement said.

All three will be "active members of senior management," Peter Clarke, chief executive of Man Group said, according to a transcript of the conference call on Monday announcing the deal.

Man Group will not have to raise additional capital to pay for GLG; instead, the firm will use its cash on hand, Jon Aisbitt, chairman of Man Group said during a conference call.

GLG recently came out with its first quarter results in that seemed to indicatethe firm was stabilizing. GLG reported a 6.7% rise in its asset base from the previous quarter to $23.67 billion from $22.18 billion. The company also said it cut its losses to $60.8 million from $120.9 million a year prior.

Once the deal closes, which is expected to happen by the end of September, Man will have roughly $63 billion in assets under management, according to the deal announcement put out by the firm.

GLG, a successful hedge fund firm hit hard by the recession, also had to deal with the exit of one of its star traders Greg Coffey, an emerging markets manager. He left GLG in April 2008 for a reported $250 million package with Moore Capital. Despite his exit, the fund Coffey ran for GLG continued to be successful, reportedly returning 28% in the post-Coffey era as of November 2009.

As of the end of March, GLG had roughly $23.7 billion in capital under management. The firm, launched in 1997, has returned 14.1% a year in its alternative strategies and 7.3% a year in its long-only investments, the Man announcement said.

Earlier this month, London-headquartered GLG announced it had broken into the U.S. market with a $250 million mandate from a client based in the country. According to the announcement, the firm said this showed it was gaining "traction" in the U.S.

Representatives from both GLG and Man were not immediately available at press time.


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Arlene R. Busch
312.498.9595 Mobile
abusch@contegocapital.com