19th Jun 2014 06:59
LONDON (Alliance News) - Man Group PLC Thursday said it has agreed to acquire Numeric Holdings LLC, a Boston quantitative equity manager that had USD14.7 billion in funds under management at the end of May, for up to USD494.0 million, as it looks to diversify its flagship AHL fund and expand in North America.
News of the acquisition comes three weeks after Man Group confirmed it was in talks to buy Numeric from majority owners TA Associates and other shareholders, as well as from management and employees. Man Group has been seeking to diversify its AHL fund, which has suffered from investor outflows and weak performance in recent years.
In a statement, Man Group said it will pay an initial USD219.0 million in cash for Numeric, while up to USD275.0 million in either cash or shares could be paid to Numeric management and employees following the fifth year after the acquisition's completion, which is expected in September, depending on the business's run-rate profitability. Numeric is being acquired debt-free with USD3.0 million of excess net assets. It generated USD47.0 million in earnings before interest, taxes, depreciation and amortization in 2013.
"The transaction provides us with the opportunity to advance two of our core strategic objectives: first, to build a diversified quantitative fund management business with significant assets in fundamentally based quantitative strategies and second, to develop further our presence in the US market," Chief Executive Manny Roman said in a statement.
As part of the deal, Numeric's management is taking the majority of the proceeds from Man in the form of an 18.3% equity stake in Numeric. Management will also be given profit interests that will give the holders a share in 16.5% of the increase in the value of the business up until the fifth year following the acquisition's completion. At that point, Man Group will have the option to buy the management's equity and profit interests under a put and call option agreement.
By Samuel Agini; [email protected]; @samuelagini
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