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The ARK Invest Takeover Battle Is Over
A new deal has “extinguished” Resolute’s option to acquire an additional stake in the ETF firm.
ARK Investment Management and minority shareholder Resolute Investment Managers have come to a new agreement, ending a planned takeover of the ETF firm known for betting on Tesla.
The two firms on Monday announced terms of a “long-term arrangement” in which Resolute will remain ARK’s distribution partner, while ARK founder Cathie Wood will remain the New York asset manager’s majority shareholder.
“We can succeed only with strong partners by our side and we are delighted to have reaffirmed the partnership with Resolute for our U.S. distribution,” Wood said in a statement.
In a separate deal with Wood, Resolute has “extinguished” its option to acquire an additional equity stake in ARK, in exchange for “an agreed value.” The option repurchase will be financed through a loan provided by Eldridge Corporate Funding.
Together, the two agreements stop a potential takeover of the ETF firm that was put into motion in late October, when Resolute informed ARK of its intention to exercise an option to purchase a majority stake in Wood’s firm. The option was included as part of the minority investment that Resolute made in ARK in July 2016.
[II Deep Dive: A Minority Stakeholder Wants to Take Control of ARK. Cathie Wood Is Pushing Back.]
Wood pushed back against the move, issuing a statement in November that she and ARK’s other employee-owners were “disappointed that Resolute Investment Managers, Inc., and its private equity owner, Kelso & Company, have chosen to issue this unwelcome notice that they intend to seize control of our business.”
According to a regulatory filing by ARK, Resolute notified the ETF firm of its plans on October 29 — a few days after ARK put out a press release announcing a request for proposal process to potentially replace Resolute Investment Distributors, a Resolute affiliate, as the distributor of ARK’s U.S. retail and institutional products.
Under the new agreement, Resolute will remain ARK’s distribution partner, with the two firms announcing plans to build out additional digital distribution efforts.
“Cathie Wood and her team have done an exemplary job building ARK Invest from the ground up, and we look forward to supporting the firm’s momentum for years to come,” Resolute chairman and CEO Gene Needles said in a statement. “We’re pleased to continue being an instrumental part of ARK’s growth, a role we have fulfilled since acquiring a minority investment in the company in 2016.”