Daniel Och is the founder and largest shareholder of Sculptor Capital Management. He has spoken out against Rithm Capital’s $639mn purchase of the hedge fund. Och believes that the deal undervalues Sculptor Capital Management.
In a Wednesday letter to the board, the billionaire investor who owns a 12.5% stake in Sculptor made his position public on the pending deal.
“We believe the transaction with Rithm significantly undervalues the business and penalizes all shareholders due to the breaches of fiduciary duties and lack of proper supervision that have repeatedly destroyed shareholder value,” wrote he in a letter signed by several former executives.
The letter reignites a feud that reached a boiling-point in the last year, when Och and Sculptor management became embroiled in a legal dispute. Och challenged the board’s decision to pay Jimmy Levin $145mn by 2021, despite the investor’s claim that the company had “a period of below-average performance”.
Sculptor and Och resolved the lawsuit in the last year and launched a process of sale using a special committee. The committee unanimously decided to sale Sculptor, a move which was believed to end the dispute. *
The letter sent on Wednesday revealed that the process of selling shares had been poorly managed. Och claimed that other bidders were excluded, but still wanted to make a higher offer than the $11.15 agreed by Rithm for Sculptor’s class A shares. Sculptor shares rose 0.9 percent to $11.03 Wednesday.
Rithm’s offer represents an 18% premium over the closing price of the fund before the announcement, but it is still a small fraction of the $12bn valuation that Sculptor (then known as Och-Ziff Capital Management) listed at in 2007.
Sculptor shares have dropped significantly in the last few years. The firm, then known as Och-Ziff revealed that it was being investigated by the federal government for bribery committed in at least five African nations including Libya and the Democratic Republic of Congo. OchZiff settled the charges with US authorities by paying $413mn in 2016. Och then handed the reins over to the firm.
In a letter sent on Wednesday, Och and former executives stated that they have been trying to change the terms of this deal with Rithm but so far had not been successful. The letter stated that “absent material changes to the proposed deal, we will vigorously object to this transaction.”