Rithm Capital Corp. (NYSE:RITM) proposed a non-binding indication of interest to acquire Sculptor Capital Management, Inc. (NYSE:SCU) from shareholders on November 29, 2022. Rithm Capital Corp. (NYSE:RITM) entered into a definitive agreement to acquire Sculptor Capital Management, Inc. (NYSE:SCU) from shareholders for approximately $550 million on July 23, 2023. As per the amended agreement entered on October 12, 2023, the aggregate transaction value is approximately $676 million. As part of the transaction, Sculptor Class A shareholders will receive cash consideration equal to $11.15 per share, with Sculptor operating partnership unitholders receiving the applicable amount of cash consideration in accordance with the Sculptor partnership agreements based on such $11.15 per share price. As of October 12, 2023 Sculptor Class A stockholders will receive $12.00 per share, representing an increase of 7.62% over Rithm?s previously agreed price of $11.15 per Class A share announced on July 24, 2023. As of October 26, 2023 Sculptor Class A stockholders will receive $12.70 per share with an aggregate transaction value of approximately $719.8 million. The parties also expect that, subject to the satisfaction of certain conditions, Sculptor operating partnership Class A / Class A-1 unitholders will be given the opportunity, in lieu of receiving cash consideration, to roll their Sculptor partnership units into partnership units of one or more Rithm subsidiaries. Sculptor is expected to operate as a separate business unit within Rithm. The transaction represents a premium of 18% over the closing price of Sculptor?s Class A shares on July 21, 2023 and a premium of 31% over the unaffected November 17, 2022 closing Class A share price of $8.50. The transaction is expected to be funded from Rithm?s cash on hand and available liquidity and is expected to be accretive to Rithm shareholders in 2025. Sculptor will be required to pay Rithm a termination fee of $16,576,819 (net of any payment of Rithm Expenses (as defined below)) in the following circumstances (i) if Rithm terminates the Merger Agreement due to an adverse recommendation change; (ii) if Sculptor terminates the Merger Agreement and an adverse recommendation change occurs, the Sculptor stockholder meeting has been held and the Merger Agreement has not been adopted by the Required Stockholder Approval; (iii) if Sculptor terminates the Merger Agreement in order to enter into a definitive agreement with respect to a superior proposal; or (iv) if an acquisition proposal is made for Sculptor and not withdrawn, the Merger Agreement is later terminated under certain circumstances and within twelve months after termination Sculptor enters into a definitive agreement with respect to an acquisition proposal and that acquisition proposal is subsequently consummated. As on October 12, as per amended agreement, the termination fee was increased to $20,307,196 (net any payment of Rithm expenses). The Amendment also increases the cap on the amount of Rithm expenses that Sculptor is required to reimburse in certain circumstances in the amount of $5,415,252.

The Sculptor Board of Directors, acting on the unanimous recommendation of the Special Committee, has unanimously approved the transaction and has recommended that Sculptor shareholders vote to approve it as well. Rithm?s Board of Directors has also unanimously approved the transaction. The transaction is subject to customary closing conditions, including approvals by Sculptor?s shareholders (including the approval by the holders of a majority of the outstanding shares of Class A stock not owned by Class A / A-1 unitholder shareholders or executive managing directors of Sculptor as of July 23, 2023 or the date of Sculptor?s shareholder meeting to approve the transaction), certain regulatory approvals, and the receipt of certain consents. As on October 12, 2023, Sculptor announced that the FCA approval was obtained which is valid for three months expiring on November 23, 2023 and the HSR Act waiting period expired at on September 5, 2023, also, on September 29, 2023, Rithm received written confirmation of the SFC Approval. Such approval is valid for a six-month period expiring on March 29, 2024. As of October 17, 2023, Daniel S. Och, Harold Kelly, Richard Lyon, James O?Connor and Zoltan Varga, today filed a complaint against the Company, its directors (including the members of the Special Committee) and Rithm Capital in the Delaware Court of Chancery. The transaction is expected to close in the fourth quarter of 2023. As of October 26, 2023, the Second Amendment increases the termination fee payable by Sculptor to Rithm in certain circumstances pursuant to the Merger Agreement (the ?Company Termination Fee?). Under the terms of the Second Amendment, the Company Termination Fee has been increased from the dollar amount of $20,307,196 to the dollar amount of $22,426,831. As part of the Amended Agreement, Rithm has also agreed to waive Sculptor?s client consent condition with respect to all Sculptor funds, provided that the closing of the Transaction occurs on or prior to November 17, 2023. As of November 16, 2023, shareholders of Sculptor voted in favor of the merger agreement thereby approving the transaction.

Citi acted as the exclusive financial advisor to Rithm. Peter D Serating, Heather Cruz, David C Hepp, David Polster and Blair T Thetford of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to Rithm Capital Corp. Lawrence Cagney, Gregory Gooding, Gary Murphy, Jeff Robins, Robert Dura, Marc Ponchione, John Young, Jane Shvets, Phillip Rohlik and Konstantin Bureiko of Debevoise & Plimpton LLP served as legal counsel to Rithm. PJT Partners acted as financial advisor and fairness opinion provider; and Peter Harwich of Latham & Watkins LLP acted as legal counsel to Sculptor?s Special Committee. J.P. Morgan Securities LLC acted as financial advisor and fairness opinion provider; and Adé Heyliger, Brian Parness, David E. Wohl, Harvey M. Eisenberg, Jason Vollbracht, Jessie Chiang, Joe Pari, Marc Schubert, Raymond O. Gietz, Regina Readling, Shawn Brett Cooley, Shawn Kodes, Rachel Shapiro, Michael C. Naughton and Nathan Cunningham of Weil, Gotshal & Manges LLP acted as legal counsel to Sculptor. Jakob Rendtorff of Simpson Thacher & Bartlett LLP Represents PJT Partners LP as Financial Advisor. Stuart Rogers of Alston & Bird acted as legal counsel to Citigroup, financial advisor to Rithm Capital Corp. Andrew J. Levander and Kenneth E. Young of Dechert LLP acted as legal advisor to Sculptor Capital Management, Inc. Sculptor retained Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $50,000, plus a success fee of $50,000, and will reimburse Innisfree for certain expenses. American Stock Transfer & Trust Company acted as transfer agent to Sculptor.
Harvey M. Eisenberg, Adé Heyliger, Brian Parness, David E. Wohl, Harvey M. Eisenberg, Jason Vollbracht, Jessie Chiang, Joe Pari, Marc Schubert, Raymond O. Gietz, Regina Readling, Shawn Brett Cooley, Shawn Kodes, Rachel Shapiro, Michael C. Naughton and Nathan Cunningham of Weil, Gotshal & Manges LLP acted as a legal advisor to Sculptor. Ropes & Gray LLP acted as legal counsel to Sculptor. PJT Partners is entitled to receive aggregate compensation of approximately $10 million, of which $2 million became payable on delivery of PJT Partners? opinion to the Special Committee and with the remainder of this fee to become payable upon consummation of the proposed Transactions. Sculptor has agreed to pay J.P. Morgan an estimated fee of $17.5 million, $2.0 million of which became payable to J.P. Morgan at the time J.P. Morgan delivered its opinion. J.P. Morgan and PJT Partners also acted as due diligence provider to Sculptor in the transaction.

Rithm Capital Corp. (NYSE:RITM) completed the acquisition of Sculptor Capital Management, Inc. (NYSE:SCU) from shareholders on November 17, 2023. As a result of the completion of the merger, class A common stock of Sculptor will be delisted from NYSE. In connection with the consummation of the transaction, James Levin, Wayne Cohen, Marcy Engel, Charmel Maynard, Bharath Srikrishnan, and David Bonanno, all of the directors of Sculptor, resigned from the board of directors.