When top Man and GLG Partners executives Monday gathered for a press conference to announce the $1.6 billion merger between the two alternative investments firms, Noam Gottesman, GLGs Chairman and Co-CEO proclaimed: The combination of Man and GLG will be truly transformational. The strategic fit is very strong. We are excited to be taking senior management roles within the combined group.
The deal also marks the end of Gottesmans nearly three years as the head of a public company, a role the normally secretive hedge fund executive never really felt comfortable playing. You can also make the case that Gottesman lost patience with the slow pace in which it was taking him to execute his global expansion strategy.
Under the deal, GLGs shareholders will receive $4.50 per share in cash. GLGs principals - Gottesman, co-founder Pierre Lagrange and co-CEO Emmanuel Roman - will receive 1.0856 New Man shares for each of their shares of GLG common Stock, valuing each share of GLG stock at just $3.50. However, they can receive as much as $4.25 per share in new Man shares.
GLGs NYSE stock surged about 50 percent on the news.
London-based GLG was founded in 1995 by Gottesman, LaGrange and Jonathan Green (who left the firm a number of years ago) as a division of Lehman International. It went public in 2007 in a reverse merger. Under the transaction, Gottesman and LaGrange each received a package of stock and cash valued at the time at about $970 million, which heavily explained their enthusiasm for going public.
However, since then they have experienced a number of setbacks and frustrations. GLGs then star manager and emerging markets specialist Greg Coffey left the firm, hoping to start his own company. Investors subsequently yanked out $4 billion from the firm.
Together with losses and redemptions resulting from the 2008 market implosion, GLG wound up losing one third of its assets.
The stock, which briefly peaked at $14, dropped below $3, where it was trading before the Man deal was announced, no doubt frustrating Gottesman.
Stephen Taub, who has covered the hedge fund industry for 30 years, is a contributing editor to Institutional Investor and Absolute Return-Alphamagazines.