Sculptor board sued for favoring Rithm's $639 million buyout bid

Sculptor Capital Management Inc. executives were accused in a lawsuit of engineering a proposed $639 million acquisition of the fund by rival Rithm Capital Corp. in a way that is unfairly blocking a higher bid. 

Chief Executive Officer Jimmy Levin and other directors shortchanged investors by using non-disclosure agreements tied to the deal to prevent stockholders from considering a higher offer from a group led by Boaz Weinstein that includes billionaires Bill Ackman, Marc Lasry and Jeff Yass, Sculptor investor Gilles Beauchemin said Monday in a Delaware Chancery Court lawsuit. Still, such non-disclosure pacts are common in big U.S. merger and acquisition agreements.

The Sculptor board is breaching legal duties to shareholders "by continuing to block the topping bid and issuing disparaging disclosures" about the rival offer, according to the suit. 

The suit is the latest salvo in the battle over the future of Sculptor, which has been racked by internal dissent. Sculptor founder Dan Och and other former executives oppose the Rithm deal, arguing it isn't in shareholders' best interests. Another shareholder sued in federal court in Manhattan last week, saying the deal wasn't fair to investors.

Sculptor accepted Rithm's bid of $11.15 a share in July. A board committee weighing overtures for the firm determined it was the superior bid, even though the Weinstein-led group had raised its offer to $12.76 a share.  

A representative of New York-based Sculptor declined to comment Monday on Beauchemin's suit.

Och tapped Levin to take over the firm, formerly known as Och-Ziff, but the two later fought over compensation and control. Och — who left in 2019 and remains one of Sculptor's biggest shareholders — has been a fierce critic of Levin's handling of the fund.

The case is Gilles Beauchemin v. Marcy Engel, 2023-0921, Delaware Chancery Court (Wilmington)