Founding Partners of Sculptor Capital sue over proposed merger with Rithm

The Founding Partners of Sculptor Capital Management (SCU), which include Daniel Och, Harold Kelly, Richard Lyon, James O’Connor and Zoltan Varga, announced that they filed a complaint against the company, its directors and Rithm Capital Corp (RITM) in the Delaware Court of Chancery. “The lawsuit seeks to stop the defendants from continuing to breach their fiduciary duties to the shareholders in connection with a proposed merger transaction between the company and Rithm,” the group stated in a press release. The Founding Partners said: “The Special Committee’s actions over the past several weeks remove any doubt that they favor only one result – the preservation of management’s jobs and compensation, at the expense of shareholder value. Since the initial announcement of the Rithm transaction at $11.15 per share, the company’s stock has been trading well above $12 per share, reflecting stockholders’ expectations that the Special Committee would act to maximize value given the higher $13 per share offer from the Consortium. Despite these fundamental facts, the Special Committee has agreed to an amended deal with Rithm at only $12 per share. Worse yet, the Special Committee has imposed a series of extraordinary conditions designed to tilt the playing field against the Consortium or any other bidder and undermine stockholders’ ability to vote down the Rithm deal. The Sculptor Board continues to prevent the Consortium from communicating directly with the public stockholders or the company’s clients, and from negotiating with the Founders. In contrast, the Special Committee has readily waived Rithm’s NDA to permit it to negotiate with the Founders and to purchase 6.5% of the vote from Delaware Life. Working together, the Special Committee and Rithm are pushing forward an inferior deal that protects Sculptor management at the expense of the public stockholders. In light of what we and others believe to be a flagrant breach of fiduciary duty, we have brought this action in an effort to force the company and its directors to maximize shareholder value.”