Weinstein raises bid for Sculptor as Rithm weighs higher offer

Boaz Weinstein has again boosted his bid for hedge fund firm Sculptor Capital Management, prompting Rithm Capital Corp. to weigh a sweetened offer of its own, according to people familiar with the matter.

More than a week ago, a consortium of deep-pocketed investors led by Weinstein approached Sculptor offering a figure higher than an earlier bid of $12.76 a share, said the people, who didn’t provide the amount of the latest offer. They asked not to be identified discussing confidential information.

Shares of Sculptor rose 4.6% to $11.90 in extended trading at 4:20 p.m. in New York, after Bloomberg reported on the latest bid.

The coalition also revised other terms, scrapping a clause that would allow it to walk away even if all investors in Sculptor’s biggest hedge fund reject the deal, though other clauses still remain, the people said. Rithm’s offer allows it to back out if at least 85% of Sculptor clients, as measured by fees paid, don’t support the deal.

Rithm subsequently held talks with Sculptor about increasing its offer of $11.15 a share, or $639 million, the people said. 

Representatives for Sculptor, Weinstein and Rithm didn’t immediately comment. In a new transaction, Rithm announced on Monday it is acquiring Computershare Mortgage Services for approximately $720 million.

In July, Rithm’s initial offer was accepted amid vocal opposition from Sculptor founder Dan Och, one of the firm’s biggest shareholders, as well as other former executives, who have said they prefer Weinstein’s bid. In an Aug. 31 statement, former Sculptor Chief Executive Officer Rob Shafir called Weinstein’s bid “clearly superior,” and another shareholder sued a week later.

Sculptor, led by CEO Jimmy Levin, had said Weinstein’s offer is less attractive because of the risk that the firm’s clients would object to Weinstein’s move to replace him — thereby granting the group the option to back out of the deal. While Rithm plans to retain Levin, Weinstein’s group has said it would demote him from his position as sole chief investment officer.

The hedge fund firm hasn’t filed an updated proxy statement making public to shareholders the revised Weinstein bid, nor its talks with Rithm.

Weinstein’s group includes billionaires Bill Ackman, Marc Lasry and Jeff Yass. Their plan would be for Sculptor to become part of Weinstein’s Saba Capital Management, catapulting the firm into the ranks of the world’s biggest hedge fund managers.

Och had positioned Levin to take over of the firm, previously known as Och-Ziff, and paid him handsomely. But the two later fought over compensation and control. Och, who left in 2019, has been a critic of Levin’s pay ever since.