Man Group To Acquire GLG, Expand Its Hedge Fund Empire

Tom Burroughes

18 May 2010

Man Group, the world’s largest listed hedge fund firm, has agreed to acquire GLG Partners in a cash and share deal worth $1.6 billion, the firm said yesterday.

The deal means that UK-listed Man, which had $39.1 billion of assets at the end of March, will acquire a business with around $23.7 billion as at the same date.

Man, explaining what it sees as the benefits of the deal, argued that there is a low correlation of performance between the quantitative investment style of Man – famous for its flagship managed futures fund, AHL - and the discretionary investment style of GLG. This combination will provide “greater stability in the combined performance fee prospects and the creation of new high margin products for distribution”, it said.

It also argued that the deal will increase the amount of open-ended product offerings in onshore markets.

Man Group said it has identified annual potential cost savings of approximately $50 million with one-third of those savings expected to be achieved in the financial year ending in 2011 and the balance expected in the first six months of the financial year ending in 2012. It expects the acquisition to be accretive to earnings in the financial year ending in 2012 and neutral for the financial year ending in 2011.

“In light of the acquisition, the Man Board has brought forward its decision regarding the level of dividend it intends to recommend for the year ending 31 March 2011. The Man Board intends to recommend a dividend of at least 22 cents per Man Share in total for that year,” the firm said in a statement.

The Man Board also confirms that it will recommend a final dividend of 24.8 cents per share for the year ended 31 March 2010, giving a total dividend of 44 cents per share for the year as previously announced on 24 March 2010.

The deal is structured as a cash offer to the GLG Public Stockholders and a share offer to the GLG principals. GLG public stockholders will receive $4.50 in cash for each share of GLG common stock, representing a premium of approximately 55 per cent to the GLG closing price on 14 May 2010.

The Acquisition is expected to close by the end of September 2010. The deal is subject to shareholder and regulatory approval.