Of Course Sculptor Got Sued

The basic situation at Sculptor Capital Management Inc. is this. In July, Sculptor, a publicly traded asset management firm, signed a deal to sell itself to Rithm Capital Corp. for $11.15 per share. Then, in August, a group of hedge fund managers led by Boaz Weinstein and including Bill Ackman, Marc Lasry and Jeff Yass offered to buy Sculptor for $12.25 per share instead.

Sculptor’s board rejected Weinstein’s offer, worrying that it was too conditional. Weinstein didn’t have fully committed financing, and his deal (like Rithm’s) required the consent of Sculptor’s investor clients: Weinstein’s proposed deal would allow him to walk away if fewer than 50.1% of Sculptor’s hedge fund clients, or fewer than 80% of its real estate and collateralized loan obligation clients, consented to him taking over. (Rithm’s deal required 85% consents.) Rithm planned to keep Sculptor’s current chief executive officer and chief investment officer, Jimmy Levin, whom Sculptor’s clients presumably like. Weinstein would presumably put himself in charge of Sculptor, and the board worried that this would scare clients away, the deal would not get the required consents, and Weinstein would walk away, leaving Sculptor with nothing.