Rithm completes deal to buy hedge fund Sculptor after monthslong drama

Rithm Capital Corp. finally completed a deal to buy struggling asset manager Sculptor Capital Management Inc., dashing the ambitions of a hedge fund founder and handing a 35% gain to shareholders.

Sculptor will be bought for about $720 million, or $12.70 a share, Rithm said in a statement Friday, capping a monthslong fight punctuated by rival bids and litigation that failed to derail the deal but pushed the price ever higher.

The victory for Rithm, which began as a firm investing in mortgage-servicing rights, makes it a big player in money management now that it has Sculptor's $32.8 billion of assets.

For Saba Capital Management founder Boaz Weinstein, it ends his plan to subsume Sculptor's funds under the Saba umbrella, which could have ballooned his assets under management and catapulted him to the top of the industry. 

The deal is a boon for Sculptor Chief Investment Officer Jimmy Levin, who will keep his job and make as much as $30 million in annual compensation. 

Sculptor is "extremely happy to combine forces with Rithm," Levin said in the statement, adding that the deal positions the firm for "long-term success."

"Our team is invigorated to continue our mission of providing attractive returns to our fund investors," he said.

The deal marks a "significant milestone" for Rithm, its chief executive officer, Michael Nierenberg, said in the statement. "We are excited to bring together our talented teams and create a superior global asset management business."

Long Road

The circuitous route to the deal's completion dates back to 2017, with a fight between Sculptor founder Dan Och and Levin, his onetime protégé. Och initially groomed the younger man to lead the firm, formerly known as Och-Ziff, only to change his mind as the two fought over the speed of succession and Levin's pay.

While Och left the firm in 2019, he remained a large shareholder and kept fighting over Levin's compensation. To settle a legal dispute between the two men — a battle laced with personal attacks — Sculptor put itself on the block last November.  

In July, Sculptor said it struck a deal to be acquired by Rithm for $11.15 a share. Several weeks later, news leaked that Weinstein and a group of billionaire backers — including Bill Ackman, Marc Lasry and Jeff Yass — wanted to buy the firm and would pay more for it. 

As New York's summer turned to fall, Weinstein and his group kept offering higher prices and eventually landed on $13.50 a share. Sculptor repeatedly rebuffed Weinstein and the billionaires, contending Rithm's offer was more certain to close than theirs.

Weinstein couldn't speak to clients or shareholders about his offer because of a non-disclosure agreement. His plan — unlike Rithm's — would have demoted Levin as sole CIO. Och and other shareholders sued, alleging the firm chose Rithm's lower bid to protect Levin's job, a claim the company disputed. 

In a surprise turnabout, Och agreed to back Rithm late last month after it raised its offer to $12.70 a share and pledged to adjust Levin's employment contract. 

Rithm had the shareholder votes it needed to secure the deal. 

Weinstein's only remaining chances were dual court cases this week in Delaware and New York, which could have postponed the shareholder vote and given him a path to victory through a tender offer. The Delaware case was settled at the last minute, and a few hours later a New York judge declined to delay the vote.