17/05/2010 Author: Shannon Hawthorne

Man Group announces plans to buy GLG Partners

Man Group, the world’s largest publicly traded hedge fund firm, has agreed to buy rival GLG partners in a cash plus shares deal worth $1.6bn.

The move will see the creation of a global fund giant with a total of $63bn in assets under management.

GLG shareholders will receive $4.50 for each of their shares as a result of the merger, 55% more than the company’s closing price on Friday of $2.91, while GLG partners, including top executives Noam Gottesman, Pierre Lagrange and Emmanuel Roman, will be paid in Man Group shares valued at $3.50 each.

“This is a transformational step for GLG,” said Noam Gottesman, chairman and co-CEO of GLG in a statement. “The combination of Man’s outstanding distribution and structuring capabilities together with our industry leading investments teams will benefit all stakeholders, particularly investors in our funds whose interests will be exceptionally well served from within the combined group.”

The deal, which is expected to help Man Group expand its reach in the US, is also likely to reduce the firm’s much-criticised dependence on its flagship AHL fund, which has suffered from a run of poor performance, according to analysts.

A report in this morning’s FT named AHL among a number of high-profile hedge funds to suffer significant losses following market volatility in the first week of May.  

Shares in Man Group have fallen just under 30% since the beginning of the year. The firm expects to make savings of around $50m from the merger, a third of which is expected to be achieved by 2011.