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Fortress (FIG) to be Acquired by SoftBank for $3.3 Billion
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Earlier this week, a cash deal was announced under which New York-based asset manager, Fortress Investment Group LLC (FIG - Free Report) will be taken over by Japan-based SoftBank Group Corp. for about $3.3 billion. Following the news, shares of Fortress climbed significantly by 28.66% to close at $7.99.
“Fortress’s excellent track record speaks for itself, and we look forward to benefitting from its leadership, broad-based expertise and world-class investment platform,” said Masayoshi Son, Chairman and CEO of SoftBank Group Corp. “For SoftBank, this opportunity will immediately help expand our group capabilities, and, alongside our soon-to-be-established SoftBank Vision Fund platform, will accelerate our SoftBank 2.0 transformation strategy of bold, disciplined investment and world class execution to drive sustainable long-term growth."
The transaction awaits Fortress shareholders’ approval, certain regulatory approvals and other customary closing conditions. Further, the deal is anticipated to close in second-half 2017.
Terms of the Agreement
Per the terms of the agreement, each Fortress Class A shareholder will get $8.08 per share, at a premium of 38.6% to the closing price of Fortress Class A common stock on Feb 13, 2017, and a premium of 51.2% to Fortress’s three-month volume-weighted average price, excluding dividends. In addition, each Fortress Class A shareholder will be paid two regular quarterly dividends prior to the closing of the deal, not exceeding 9 cents per share.
Per the deal, Fortress principals will be continuing to lead Fortress, operating within SoftBank as an independent New York-based business. Senior fund managers would also be part of the group.
Moreover, Fortress principals will be investing 50% of their after-tax proceeds from the agreement in Fortress-managed funds and vehicles, and will be voting shares of a total 34.99% of the outstanding Fortress voting shares, which are held by them in favor of the deal.
Notably, SoftBank is permitted to involve in partners for partly investment.
J.P. Morgan Securities LLC, a unit of JPMorgan Chase & Co. (JPM - Free Report) acted as a financial advisor to SoftBank; while Morgan Stanley & Co. LLC, a unit of Morgan Stanley (MS - Free Report) acted as the financial advisor to Fortress.
Conclusion
Fortress has a diversified portfolio with a range of hedge fund strategies, from bitcoin to timber. However, the asset manager failed to be competitive with its bigger peers, including The Blackstone Group L.P. (BX - Free Report) in the terms of assets under management growth. Also, the volatile performance amid a financial crisis was also an undermining factor for the decline.
Fortress’ shares have declined around 4.5% in 2016, as against 3.3% gain in the Zacks categorized Investment Management industry.
At present, Fortress carries a Zacks Rank #5 (Strong Sell).
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Fortress (FIG) to be Acquired by SoftBank for $3.3 Billion
Earlier this week, a cash deal was announced under which New York-based asset manager, Fortress Investment Group LLC (FIG - Free Report) will be taken over by Japan-based SoftBank Group Corp. for about $3.3 billion. Following the news, shares of Fortress climbed significantly by 28.66% to close at $7.99.
“Fortress’s excellent track record speaks for itself, and we look forward to benefitting from its leadership, broad-based expertise and world-class investment platform,” said Masayoshi Son, Chairman and CEO of SoftBank Group Corp. “For SoftBank, this opportunity will immediately help expand our group capabilities, and, alongside our soon-to-be-established SoftBank Vision Fund platform, will accelerate our SoftBank 2.0 transformation strategy of bold, disciplined investment and world class execution to drive sustainable long-term growth."
The transaction awaits Fortress shareholders’ approval, certain regulatory approvals and other customary closing conditions. Further, the deal is anticipated to close in second-half 2017.
Terms of the Agreement
Per the terms of the agreement, each Fortress Class A shareholder will get $8.08 per share, at a premium of 38.6% to the closing price of Fortress Class A common stock on Feb 13, 2017, and a premium of 51.2% to Fortress’s three-month volume-weighted average price, excluding dividends. In addition, each Fortress Class A shareholder will be paid two regular quarterly dividends prior to the closing of the deal, not exceeding 9 cents per share.
Per the deal, Fortress principals will be continuing to lead Fortress, operating within SoftBank as an independent New York-based business. Senior fund managers would also be part of the group.
Moreover, Fortress principals will be investing 50% of their after-tax proceeds from the agreement in Fortress-managed funds and vehicles, and will be voting shares of a total 34.99% of the outstanding Fortress voting shares, which are held by them in favor of the deal.
Notably, SoftBank is permitted to involve in partners for partly investment.
J.P. Morgan Securities LLC, a unit of JPMorgan Chase & Co. (JPM - Free Report) acted as a financial advisor to SoftBank; while Morgan Stanley & Co. LLC, a unit of Morgan Stanley (MS - Free Report) acted as the financial advisor to Fortress.
Conclusion
Fortress has a diversified portfolio with a range of hedge fund strategies, from bitcoin to timber. However, the asset manager failed to be competitive with its bigger peers, including The Blackstone Group L.P. (BX - Free Report) in the terms of assets under management growth. Also, the volatile performance amid a financial crisis was also an undermining factor for the decline.
Fortress’ shares have declined around 4.5% in 2016, as against 3.3% gain in the Zacks categorized Investment Management industry.
At present, Fortress carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>