Shares of Man Group PLC (OTCMKTS:MNGPY) (LON:EMG), one of the world’s largest hedge funds, rose 6% to 105.10 pounds sterling in London and 6.24% to $1.75 per share in New York at the time of this writing, around 9:30 AM EDT.
The increase in the London-based hedge fund’s stock price was primarily driven by the announcement that it entered a conditional agreement to acquire Numeric Holdings LLC, a privately-owned quantitative equity manager with $14.7 billion of funds under management.
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Terms of the Man Group – Numeric deal
According to Man Group PLC UNSP A (OTCMKTS:MNGPY) (LON:EMG), it will pay $219 million in cash upon completion of the acquisition, with up to $275 million of further consideration payable to a broad group of Numeric’s management team and employees following the fifth anniversary of the completion under an option agreement. The option consideration is dependent on the profitability of the business.
Man Group PLC estimated that the regulatory capital usage related with the acquisition is approximately $325 million.
Benefits from Numeric acquisition
The London-based hedge fund’s board of directors believes that acquiring Numeric will provide attractive strategic, commercial and financial benefits to its business and shareholders. The fund said it will create a global quantitative investment platform (AHL and Numeric) with more than $25 billion of funds under management and a broad range of products across alternative and long-only, trend-following, technical, and fundamental strategies.
The acquisition also provides benefits through further development of its footprint on North America through a recognized brand. There is also a provision of investment capacity in a number of strategies with an attractive and long investment track record and the potential to add incremental funds under management by combining Numeric’s investment offering with Man Group’s global distribution capability.
Man Group PLC UNSP A (OTCMKTS:MNGPY) (LON:EMG) will also benefit through the addition of a highly experienced, well-regarded team with a strong cultural fit and alignment of the interests of Numeric management and its shareholders. The fund also sees an opportunity to achieve a strong risk-adjusted return on capital. The London-based hedge fund expects the acquisition to be earnings accretive from completion.
“The transaction provides us with the opportunity to advance two of our core strategic objectives: first, to build a diversified quantitative fund management business with significant assets in fundamentally based quantitative strategies and second, to develop further our presence in the US market,” according to Manny Roman, CEO of Man Group PLC.