defm14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material under
Rule 14a-12
GLG
PARTNERS, INC.
(Name of Registrant as Specified In
Its Charter)
N/A
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
o No
fee required.
þ Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11
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(1)
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Title of each class of securities to which transaction applies:
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Common stock, par value $0.0001 per share, of GLG Partners, Inc.
(Common Stock)
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(2)
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Aggregate number of securities to which transaction applies:
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323,717,487 shares of Common Stock*
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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The maximum aggregate value of the transaction was determined by
calculating the sum of (i) the product of
160,887,080 shares of Common Stock that may be exchanged
for cash in the transaction, multiplied by the $4.50 per share
cash merger consideration, (ii) the product of 149,900,926
shares of Common Stock that will be exchanged by the Selling
Stockholders (as defined below) for shares of Man Group plc in
the transaction, multiplied by the average of the high and low
sales prices of Common Stock on The New York Stock Exchange on
August 5, 2010 of $4.40 per share, and (iii) the
product of awards under GLG Partners, Inc.s stock plans
which represent a right to receive 12,929,481 shares of
Common Stock upon satisfaction of vesting conditions, which
shall be assumed by Man Group plc in the transaction and shall
be settleable in shares of Man Group plc following the
transaction upon satisfaction of such vesting conditions,
multiplied by the average of the high and low sales prices of
Common Stock on The New York Stock Exchange on August 5,
2010 of $4.40 per share. In accordance with Exchange Act Rule
0-11(b), the filing fee was determined by multiplying
0.00007130 by the maximum aggregate value of the transaction.
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(4)
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Proposed maximum aggregate value of transaction: $1,440,445,651
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$102,704
þ Fee
paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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*
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Includes 58,904,993 shares of Common Stock that are
issuable upon conversion of 58,904,993 shares of Ordinary
Class B Shares, par value $0.0001 per share, of FA Sub 2
Limited that are held by the Selling Stockholders, and awards
under GLG Partners, Inc.s stock plans which represent a
right to receive 12,929,481 shares of Common Stock upon
satisfaction of vesting conditions, which shall be assumed by
Man Group plc in the transaction and shall be settleable in
shares of Man Group plc following the transaction upon
satisfaction of such vesting conditions.
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GLG PARTNERS, INC.
399 Park Avenue, 38th Floor
New York, New York 10022
To Our Stockholders:
We cordially invite you to attend the special meeting of
stockholders of GLG Partners, Inc. to be held at the offices of
Chadbourne & Parke LLP, 30 Rockefeller Plaza, New
York, New York 10112 on October 12, 2010, at
10:00 a.m., Eastern Time. The Board of Directors has fixed
the close of business on August 30, 2010 as the record date
for the purpose of determining the stockholders entitled to
receive notice of and vote at the special meeting and any
adjournment or postponement of the special meeting.
On May 17, 2010, we agreed to be acquired by Man Group plc,
subject to, among other things, the approval of the respective
stockholders of Man and GLG as described in the accompanying
proxy statement. The proposed acquisition is contemplated to be
made through two concurrent transactions: a cash merger under an
Agreement and Plan of Merger dated as of May 17, 2010, as
amended, among Man, Escalator Sub 1 Inc. (a wholly owned
subsidiary of Man) and GLG; and a share exchange under a Share
Exchange Agreement dated as of May 17, 2010 among Man and
Noam Gottesman, Pierre Lagrange and Emmanuel Roman, together
with their related trusts and affiliated entities, two limited
partnerships that held shares for the benefit of key personnel
who are participants in GLGs equity participation plans
and the permitted transferees of such limited partnerships.
At the special meeting, you will be asked to consider and vote
upon a proposal to adopt the merger agreement. If the merger is
completed, GLGs stockholders (other than parties to the
share exchange agreement (with respect to the shares subject
thereto), Man and its subsidiaries, GLG and certain of its
subsidiaries, stockholders who properly exercise and perfect
their appraisal rights under Delaware law, and holders of
restricted shares and other awards to receive shares of our
common stock under our stock incentive plans) will have the
right to receive, for each share of our common stock they hold
at the time of the merger, $4.50 in cash.
Upon completion of the proposed merger, we will cease to be a
publicly traded company and Man will own 100% of our outstanding
securities. As a result, you will no longer have any direct or
indirect equity interest in GLG or any interest in our future
earnings or growth, if any. Following completion of the merger,
the registration of our common stock and our reporting
obligations with respect to our common stock under the
Securities Exchange Act of 1934 are expected to be terminated.
In addition, upon completion of the merger, shares of our common
stock will no longer be listed on the New York Stock Exchange.
After careful consideration, our Board of Directors has
determined that the merger is advisable and that the terms of
the merger are fair to, and in the best interests of, GLG and
its stockholders and, therefore, has approved the merger
agreement, the merger and the other transactions contemplated by
the merger agreement, and recommends that you vote
FOR adoption of the merger agreement. This
recommendation of our Board of Directors is based upon the
unanimous recommendation of a special committee of the Board of
Directors consisting of three independent and disinterested
directors, who were advised by an independent financial advisor
on the fairness of the value of the cash merger consideration
and by independent legal counsel.
In considering the recommendation of our Board of Directors with
respect to the merger, you should be aware that some of our
directors have interests in the merger that are different from,
or in addition to, the interests of our stockholders generally.
For example, each of Noam Gottesman, Pierre Lagrange and
Emmanuel Roman will enter into employment or service agreements
with Man entities providing for, among other things, the payment
of salaries, and each of them, through their respective trusts,
holds our convertible notes, which pursuant to their terms upon
conversion during a specified period following the merger will
be entitled to a make-whole premium, in addition to the right to
receive a cash amount equal to the merger consideration for each
share of common stock into which the notes are convertible. In
addition, outstanding restricted stock awards held by our
non-employee directors
will be accelerated and paid a cash amount equal to the merger
consideration for each restricted share as a result of the
merger. Moreover, indemnification and directors and
officers liability insurance coverage will continue to be
provided by the surviving corporation in the merger to our
current and former officers and directors. Furthermore, pursuant
to the terms of the merger agreement, we are required to use
reasonable best efforts to launch a tender offer to purchase all
of our outstanding warrants to purchase shares of our common
stock, including warrants held by certain of our directors.
Finally, compensation will be paid to the directors serving on
the special committee.
In addition, you are being asked at the special meeting to
approve the adjournment of the special meeting, if necessary, to
permit further solicitation and vote of proxies if there are
insufficient votes at the time of the special meeting to adopt
the merger agreement. Our Board of Directors unanimously
recommends that you vote FOR the adjournment of the
special meeting, if necessary, to permit further solicitation
and vote of proxies if there are insufficient votes at the time
of the special meeting to adopt the merger agreement. The
accompanying notice of special meeting and proxy statement
provide information regarding the matters to be acted on at the
special meeting, including any adjournment or postponement of
the special meeting. Please read these materials carefully.
YOUR VOTE IS VERY IMPORTANT, regardless of the number of shares
you own. We cannot complete the merger unless the holders of a
majority of the outstanding shares of GLG common stock
(excluding (i) Noam Gottesman, Pierre Lagrange and Emmanuel
Roman, together with their related trusts and affiliated
entities, (ii) the permitted transferees of two limited
partnerships that held shares for the benefit of key personnel
who are participants in GLGs equity participation plans,
(iii) Man and its affiliates, (iv) GLG and its
affiliates (other than directors serving on the special
committee of the GLG Board of Directors) and (v) employees
of GLG) entitled to vote on the matter vote to adopt the merger
agreement. Once you have read the accompanying materials, please
take the time to vote on the matters submitted to stockholders
at the special meeting, whether or not you plan to attend the
special meeting. I urge you to submit a proxy to vote your
shares promptly by using the telephone or Internet or by signing
and returning the enclosed proxy card. Voting by proxy will not
prevent you from voting your shares in person if you
subsequently choose to attend the special meeting in person.
Your vote in person will revoke any proxy previously submitted.
If your shares are held in street name by your
broker, bank or other nominee, your broker, bank or other
nominee will be unable to vote your shares on the merger
proposal or the adjournment proposal without instructions from
you. You should instruct your broker, bank or other nominee to
vote your shares by following the procedures provided by your
broker, bank or other nominee.
Our Board of Directors and management urge you to vote
FOR each of the proposals.
Sincerely,
Noam Gottesman
Chairman of the Board and Co-Chief Executive Officer
Neither the Securities and Exchange Commission nor any state
securities regulatory agency has approved or disapproved the
merger, passed upon the merits or fairness of the merger or
passed upon the adequacy or accuracy of the disclosure in this
document. Any representation to the contrary is a criminal
offense.
The proxy statement is dated September 13, 2010 and is
first being mailed to stockholders on or about
September 13, 2010.
GLG
PARTNERS, INC.
399 Park Avenue, 38th Floor
New York, New York 10022
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
To Be Held October 12,
2010
To Our Stockholders:
Notice is hereby given that a special meeting of stockholders of
GLG Partners, Inc. (GLG) will be held on
October 12, 2010, at 10:00 a.m., Eastern Time, at the
offices of Chadbourne & Parke LLP, 30 Rockefeller
Plaza, New York, New York 10112 for the following purposes:
1. To consider and vote on a proposal to adopt the
Agreement and Plan of Merger dated as of May 17, 2010, as
amended, among GLG, Man Group plc, a public limited company
existing under the laws of England and Wales (Man),
and Escalator Sub 1 Inc., a Delaware corporation and a wholly
owned subsidiary of Man (the Merger Proposal).
2. To approve the adjournment of the special meeting, if
necessary, to permit further solicitation and vote of proxies if
there are insufficient votes at the time of the special meeting
to approve the Merger Proposal (the Adjournment
Proposal).
3. To transact such other business as may properly come
before the meeting or any adjournment or postponement of the
special meeting.
Only stockholders who owned shares of our common stock and
Series A voting preferred stock at the close of business on
August 30, 2010 will be entitled to notice of, and to vote
at, the meeting or any adjournments or postponements of the
meeting. A complete list of stockholders entitled to vote at the
meeting will be available for examination by any stockholder,
for any purpose relating to the meeting, during ordinary
business hours at our principal offices located at 399 Park
Avenue, 38th Floor, New York, New York 10022 at least ten
days before the special meeting.
We urge you to read the accompanying proxy statement carefully
as it sets forth details of each proposal to be voted on,
including the proposed merger and other important information
related to the merger.
Under Delaware law, if the merger is completed, holders of our
common stock who do not vote in favor of the Merger Proposal and
who otherwise properly perfect their demand for appraisal under
Delaware law will have the right to seek appraisal of the fair
value of their shares as determined by the Delaware Court of
Chancery. In order to exercise your appraisal rights, you must
(i) submit to GLG a written demand for an appraisal prior
to the stockholder vote on the Merger Proposal, (ii) not
vote in favor of the Merger Proposal, nor consent thereto in
writing, (iii) continue to hold your shares until the
consummation of the merger and (iv) comply with other
Delaware law procedures explained in the accompanying proxy
statement.
Your vote is important and we urge you to submit your proxy for
voting at the special meeting on the Internet, by telephone or
by completing, signing, dating and returning your proxy card as
promptly as possible by mail, whether or not you expect to
attend the special meeting. If you are unable to attend in
person and you submit your proxy on the Internet, by telephone
or by returning your properly executed proxy card in time for
the special meeting, your shares will be voted at the special
meeting in accordance with your instructions as reflected on
your proxy. Properly executed proxies that do not contain voting
instructions will be voted FOR the approval of the
Merger Proposal and FOR approval of the Adjournment
Proposal. If your shares are held in street name by
your broker, bank or other nominee, only that holder can vote
your shares unless you obtain a valid legal proxy from your
broker, bank or nominee. You should follow the directions
provided by your broker, bank or nominee regarding how to
instruct such broker, bank or nominee to vote your shares.
The merger is described in the accompanying proxy statement,
which we urge you to read carefully. Copies of the merger
agreement, the amendment to the merger agreement, the share
exchange agreement and the other transaction-related documents
are attached as appendices to the proxy statement.
Your Board of Directors recommends that you vote in favor of the
Merger Proposal and the Adjournment Proposal. Please refer to
the proxy statement for detailed information on each of the
proposals.
By Order of the Board of Directors,
Alejandro R. San Miguel
Secretary
New York, New York
September 13, 2010
TABLE OF
CONTENTS
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iii
Summary
Term Sheet
References to GLG, the Company,
we, our or us in this proxy
statement refer to GLG Partners, Inc. and its subsidiaries
unless otherwise indicated by context. The following summary,
together with Questions and Answers About the Merger and
the Special Meeting of Stockholders, highlights selected
information contained in this proxy statement. You should
carefully read this entire proxy statement and the other
documents to which this proxy statement refers you for a more
complete understanding of the matters being considered at the
special meeting of stockholders. In addition, this proxy
statement incorporates by reference important business and
financial information about GLG. You may obtain the information
incorporated by reference into this proxy statement without
charge by following the instructions under Where You Can
Find More Information. References to $ in this
proxy statement refer to U.S. dollars.
The
Acquisition
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On May 17, 2010, we agreed to be acquired by Man Group plc
subject to, among other things, the approval of the respective
stockholders of Man and GLG as described in this proxy
statement. The proposed acquisition is contemplated to be made
through two concurrent transactions:
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a cash merger under an agreement and plan of merger dated as of
May 17, 2010, as amended, among Man, Escalator Sub 1 Inc.
and GLG; and
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a share exchange (which will occur immediately prior to the
merger) under a share exchange agreement dated as of
May 17, 2010 among Man and the following:
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Noam Gottesman, Pierre Lagrange and Emmanuel Roman, whom we
refer to collectively as the Individual Principals;
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the Gottesman GLG Trust, the Roman GLG Trust and its wholly
owned subsidiary Jackson Holdings Services Inc., and the
Lagrange GLG Trust and its wholly owned subsidiary Point
Pleasant Ventures Ltd., which together with the Individual
Principals and TOMS International Ltd. (TOMS), a
wholly owned subsidiary of the Gottesman GLG Trust, we refer to
collectively as the Principals;
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Sage Summit LP and Lavender Heights Capital LP, which are
limited partnerships that held shares of GLG common stock for
the benefit of non-Principal members of GLGs senior
management and key investment personnel based principally in the
UK who are participants in GLGs equity participation plan
who were allocated interests in a percentage of the cash and
shares of GLG common stock paid as consideration in the reverse
acquisition by Freedom Acquisition Holdings, Inc. of GLG
Partners LP and certain affiliated entities in November
2007; and
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the permitted transferees of Sage Summit LP and Lavender Heights
Capital LP described in the next sentence, which together with
the Principals (other than TOMS), we refer to as the
Selling Stockholders. On June 21, 2010, Sage
Summit LP and Lavender Heights Capital LP transferred all of
their shares of GLG common stock to Blue Hill Trust and Green
Hill Trust, respectively, and these permitted transferees became
parties to the share exchange agreement and the voting and
support agreement.
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The
Parties to the Merger (Page 95 and
Appendix A)
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The parties to the merger agreement are the following:
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GLG Partners, Inc., a Delaware corporation, is a global asset
management company offering its clients a wide range of
performance-oriented investment products and managed account
services. GLGs primary business is to provide investment
management advisory services for various investment funds and
companies. Net assets under management as of June 30, 2010
were approximately $23.0 billion. GLG has an investment
management team and supporting staff of over 400 people.
GLGs common stock is traded on the New York Stock Exchange
under the symbol GLG.
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Man Group plc is a public limited company incorporated under the
laws of England and Wales. Man is a leading alternative
investment management business delivering a comprehensive range
of innovative guaranteed and open-ended products and tailor-made
solutions to private and institutional investors globally.
Mans investment products are designed to offer performance
across market cycles and are developed and structured internally
and through partnerships with other financial institutions. Man
has a global distribution network and an investment management
track record dating back more than 20 years. Funds under
management as of June 30, 2010 were $38.5 billion. Man
employs approximately 1,500 permanent employees worldwide, with
key centers in London and Pfaeffikon, Switzerland. Mans
ordinary shares are listed on the Official List of the Financial
Services Authority and traded on the London Stock Exchange (LSE:
EMG) and Man is a member of the FTSE 100 Index.
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Escalator Sub 1 Inc., which we refer to as Merger
Sub, is a Delaware corporation and wholly owned subsidiary
of Man Principal Strategies Holdings LLC, which we refer to as
Holdco. Holdco is a Delaware limited liability
company and wholly owned subsidiary of Man. Holdco was formed
solely for the purpose of owning Merger Sub. Merger Sub was
formed solely for the purpose of entering into the merger
agreement described below and consummating the transactions
contemplated by the merger agreement.
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The
Merger and its Effects (Page 95)
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You are being asked to vote to adopt the agreement and plan of
merger dated as of May 17, 2010, as amended, among GLG, Man
and Merger Sub, which we refer to as the Merger
Proposal.
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Pursuant to the merger agreement, Merger Sub will merge with and
into GLG.
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GLG will be the surviving corporation in the merger and will
continue to do business as GLG Partners, Inc.
following the merger.
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Upon completion of the proposed merger, GLG will cease to be a
publicly traded company and Man, indirectly through Holdco, will
own 100% of the outstanding shares of GLG common stock. As a
result, you will no longer have any direct or indirect equity
interest in GLG or any interest in our future earnings or
growth, if any.
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Following completion of the merger, the registration of our
common stock and our reporting obligations with respect to our
common stock under the Securities Exchange Act of 1934, as
amended, are expected to be terminated. In addition, upon
completion of the proposed merger, our shares of common stock
will no longer be listed on the New York Stock Exchange.
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Merger
Consideration (Page 96)
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As of the effective time of the merger, each issued and
outstanding share of our common stock (other than
(i) shares owned by GLG as treasury stock or owned by
certain subsidiaries of GLG, (ii) shares owned by Man or
Merger Sub (including the shares acquired from the Selling
Stockholders in the share exchange), (iii) shares held by
dissenting stockholders, (iv) restricted shares issued
under GLGs stock and incentive plans, and (v) awards
under GLGs stock and incentive plans representing a right
to receive shares of common stock of GLG) will be converted into
the right to receive $4.50 in cash, without interest, at which
time all such shares of GLG common stock will no longer be
outstanding and will automatically be canceled.
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Treatment
of GLG Equity Awards (Page 97)
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Immediately prior to the effective time of the merger, each
issued and outstanding share of restricted common stock of GLG
issued under GLGs stock and incentive plans will be
converted into the right to receive $4.50 in cash, without
interest, the receipt of which will be (except in the case of
restricted shares held by our non-employee directors) subject to
the same vesting terms and conditions and other rights and
restrictions that were applicable to such shares of restricted
common stock prior to the effective time, except in cases where
the acceleration of the vesting of such cash awards to the
effective time of the merger, in an
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amount sufficient to pay the income tax
and/or
employee national insurance contributions, may be necessary for
liability that arises as a result of the merger for U.K.
employees;
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Immediately prior to the effective time of the merger, all
outstanding restricted stock awards held by our non-employee
directors will be converted into the right to receive $4.50 per
share and the vesting of such restricted stock awards will be
accelerated to the effective time of the merger; and
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At the effective time of the merger, each outstanding award
under GLGs stock and incentive plans representing a right
to receive shares of common stock of GLG (other than shares of
restricted common stock) will be settled in ordinary shares of
Man, in an amount equal to the number of shares underlying such
stock rights multiplied by the exchange ratio set forth in the
share exchange agreement, or if our representation in the merger
agreement that each holder of such stock rights is a
non-U.S. resident
is not correct or if the assumption of the stock rights by the
surviving corporation is prohibited by applicable securities
laws, then such stock rights will instead be converted at the
effective time of the merger into a right to receive $4.50 in
cash, without interest, multiplied by the number of shares
covered by such stock rights. In either case, the ordinary
shares of Man or the cash amount will be subject to the same
vesting and other terms and conditions that were applicable to
such stock rights prior to the effective time of the merger.
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Interests
of Certain Persons in the Merger (Page 74)
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In considering the recommendation of the special committee of
our board of directors and our board of directors with respect
to the merger agreement, you should be aware that some of our
directors and executive officers have interests in the merger
that are different from, or in addition to, the interests of our
stockholders generally. These interests include, among others:
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the Selling Stockholders are parties to the share exchange
agreement pursuant to which they will transfer to Man,
immediately prior to the effective time of the merger, all of
their shares (subject to certain exceptions) of (a) our
common stock, (b) our Series A voting preferred stock,
(c) our subsidiary FA Sub 2 Limiteds exchangeable
Ordinary Class B Shares, which are exchangeable into shares
of our common stock (at which time the associated Series A
voting preferred stock is redeemed), and (d) any other
shares of our capital stock or such FA Sub 2 exchangeable shares
they acquire after the date of the share exchange agreement, in
exchange for ordinary shares of Man at an exchange ratio of
1.0856 ordinary shares of Man per share of our common stock
exchanged by the Selling Stockholders (which ratio may be
reduced prior to closing under certain circumstances), which
would represent a value of $3.50 per share of our common stock
based on the closing price of Man ordinary shares on May 14,
2010, the last trading day prior to the announcement of the
merger and share exchange, and the applicable currency exchange
rate on that date;
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following the consummation of the share exchange, as holders of
Man ordinary shares, the Selling Stockholders will be entitled
to receive dividends declared and paid by Man; for example, the
Man board intends to recommend a dividend of at least
22 cents per Man ordinary share in its fiscal year ending
March 31, 2011;
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each of Messrs. Gottesman, Lagrange and Roman will enter into
employment or service agreements with Man entities providing
for, among other things, the payment of an annual base salary of
$1,000,000, which is equal to the annual base salary currently
being paid to each such person pursuant to their respective
employment agreements with GLG, certain employee benefits, and,
in certain circumstances, a payment of severance of up to
$1,000,000 in lieu of 12 months advance written notice of
termination of employment, such that the payment is calculated
by reference to their base salary for the whole or any unexpired
part of the notice period to which they are entitled;
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each of Messrs. Gottesman, Lagrange and Roman, under the terms
of a non-competition and non-solicitation agreement or a deed of
vendor covenant, has agreed to be bound by certain restrictive
covenants relating to competition with GLGs business or
solicitation of GLGs employees and directors beginning on
the date of the closing of the share exchange and ending on the
third anniversary of such date in exchange for a $100,000
payment (payable within 14 days after the date of the closing of
the share exchange);
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each of Messrs. Gottesman, Lagrange and Roman, through
their respective trusts, hold our 5.00% dollar-denominated
convertible subordinated notes due May 15, 2014, which
pursuant to their terms upon conversion during a specified
period following the merger will be entitled to a make-whole
premium, in addition to the right to receive a cash amount equal
to the merger consideration for each share of common stock into
which the notes are convertible, which aggregate principal
amount and make-whole premium are described under Special
Factors Interests of Certain Persons in the
Merger A Portion of Our 5.00% Dollar-Denominated
Convertible Subordinated Notes are Held by the Principals
below;
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outstanding restricted stock awards held by our non-employee
directors will be accelerated and paid a cash amount equal to
the merger consideration for each restricted share as a result
of the merger, which outstanding restricted stock award amounts
are described under Special Factors Interests
of Certain Persons in the Merger Treatment of Awards
Under the Restricted Stock Plan, 2007 Long Term Incentive Plan,
2009 Long Term Incentive Plan and the Equity Participation
Plan below;
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indemnification and directors and officers liability
insurance coverage will continue to be provided by the surviving
corporation in the merger to GLGs current and former
officers and directors;
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pursuant to the terms of the merger agreement, we are required
to use reasonable best efforts to launch a tender offer to
purchase all of our outstanding warrants to purchase shares of
our common stock, including warrants held by certain of our
directors described under Special Factors
Interests of Certain Persons in the Merger Warrant
Tender Offer below, at a price of $0.129 per warrant;
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certain of our executive officers and senior employees are
entitled to severance payments in the event their employment is
terminated under specified circumstances subsequent to the
consummation of the merger in the estimated aggregate amount of
approximately $13.5 million, plus an amount, if any, to pay
or reimburse any excise tax imposed on severance payments, as
described under Special Factors Interests of
Certain Persons in the Merger Amendments to Certain
Employment Agreements with GLG below; and
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compensation will be paid to the directors serving on the
special committee in the amounts of $150,000 for the chairman of
the special committee and $75,000 for each other member of the
special committee, as described under Special
Factors Interests of Certain Persons in the
Merger Compensation Paid to Members of the Special
Committee below.
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The special committee and our board of directors were aware of
these interests and considered them, among other matters, in
reaching their decision to approve the merger agreement and
recommend that GLGs stockholders vote in favor of the
Merger Proposal.
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Required
Vote for Merger Proposal (Page 93)
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The approval of the Merger Proposal will require the affirmative
vote of:
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(i)
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the holders of a majority of all of GLGs outstanding
shares of common stock and Series A voting preferred stock
as of the record date for the meeting voting as a single class,
which vote we refer to as the Statutory Stockholder
Approval; and
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(ii)
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the holders of a majority of GLGs outstanding shares of
common stock as of the record date for the special meeting,
other than shares of common stock held by:
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the Selling Stockholders and their affiliates;
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Man and its affiliates;
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GLG and its affiliates (other than directors on the special
committee); and
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employees of GLG.
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We refer to the vote described in clause (ii) as the
Minority Stockholder Approval.
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Pursuant to the terms of a voting and support agreement dated as
of May 17, 2010 among Man, Merger Sub, the Selling
Stockholders and TOMS, the Selling Stockholders and TOMS have
agreed to vote their shares of common stock and Series A
voting preferred stock in favor of the Merger Proposal. Our
other directors and executive officers have informed us that
they intend to vote all of their shares of common stock and
Series A
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voting preferred stock in favor of the Merger Proposal for the
reasons described more fully in Special
Factors Fairness of the Merger and Recommendations
of the Special Committee and the GLG Board. Except as
described in this proxy statement, to GLGs knowledge,
after making reasonable inquiry, none of GLGs directors,
officers or affiliates has made any public recommendation either
in support of or opposed to the merger. Because the Selling
Stockholders and our other directors and executive officers
collectively hold approximately 51.5% of the combined shares of
our common stock and Series A voting preferred stock as of
the record date for the special meeting, we expect that the
Statutory Stockholder Approval will be obtained.
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Abstentions and broker non-votes in the case of both the
Statutory Stockholder Approval and the Minority Stockholder
Approval will have the same effect as votes against the Merger
Proposal.
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Recommendations
of the Special Committee and the Board of Directors
(Page 31)
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The special committee is a committee of our board of directors
that was formed on April 29, 2010. The special committee
has authority, among other things, to:
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establish, approve, modify, monitor and direct the process,
procedures and activities relating to the review, evaluation and
negotiation of one or more proposals made to GLG by Man for a
potential transaction and any alternative transaction;
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review, consider, evaluate, respond to, negotiate, reject,
recommend or approve on behalf of GLG or the GLG board (except
as otherwise required by law) a potential transaction with Man
or an alternative transaction;
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if it determines that continuing GLGs business without
engaging in a potential transaction with Man or an alternative
transaction is in the best interest of GLG, reject any such
potential transaction with Man or an alternative transaction;
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determine whether any such potential transaction with Man or an
alternative transaction is advisable and is fair to, and in the
best interests of, GLG and its stockholders (other than the
Selling Stockholders); and
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recommend to the GLG board of directors what action, if any,
should be taken in connection with any such potential
transaction with Man or an alternative transaction.
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The special committee has unanimously:
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determined that (i) it is in the best interests of GLG and
its stockholders for GLG to enter into the merger agreement, and
(ii) the transactions contemplated by the merger agreement,
including the merger, the share exchange agreement and the
voting and support agreement are advisable and fair to GLG and
its unaffiliated stockholders;
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approved the waiver of the restrictions on transfer applicable
to shares of capital stock of GLG held by the Selling
Stockholders under the GLG Shareholders Agreement (described
under Important Information Regarding the
Principals GLG Shareholders
Agreement); and
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recommended that the GLG board of directors (i) determine
it is in the best interests of GLG and its stockholders for GLG
to enter into the merger agreement, (ii) authorize and
approve the execution, delivery and performance by GLG of the
merger agreement (subject to the Minority Stockholder Approval),
(iii) waive the restrictions on transfer applicable to
shares of GLG capital stock held by the Selling Stockholders
under the GLG Shareholders Agreement, as requested by the
Selling Stockholders, (iv) approve the share exchange
agreement and the consummation of the transactions contemplated
thereby, (v) submit the adoption of the merger agreement to
a vote at a special meeting of GLG stockholders called for that
purpose, and (vi) recommend that stockholders of GLG vote
to adopt the merger agreement at the special meeting.
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Our board of directors, acting upon the unanimous recommendation
of the special committee, unanimously:
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determined that the merger agreement and the transactions
contemplated thereby are advisable and fair to and in the best
interests of, GLG and its stockholders;
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authorized and approved the execution, delivery and performance
by GLG of the merger agreement (subject to the Minority
Stockholder Approval);
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approved the waiver of all the restrictions on transfer
applicable to shares of GLG capital stock held by the Selling
Stockholders under the GLG Shareholders Agreement, as requested
by the Selling Stockholders;
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approved the share exchange agreement and the consummation of
the transactions contemplated thereby;
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determined to submit the adoption of the merger agreement to a
vote at a special meeting of stockholders called for that
purpose; and
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recommended that stockholders of GLG vote to adopt the merger
agreement at the special meeting of stockholders.
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Opinion
of Moelis & Company LLC (Page 38 and
Appendix D)
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Moelis & Company LLC, the special committees
financial advisors, delivered to the special committee an oral
opinion, subsequently confirmed by delivery of a written opinion
dated May 16, 2010 that, as of May 16, 2010 and based
upon and subject to the limitations and qualifications set forth
therein, the consideration of $4.50 per share in cash to be
received by the GLG stockholders (other than the Selling
Stockholders) in the merger was fair from a financial point of
view to such holders other than the Selling Stockholders.
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The full text of the written opinion of Moelis dated
May 16, 2010 is attached as Appendix D to this proxy
statement. The written opinion of Moelis sets forth, among other
things, the assumptions made, procedures followed, matters
considered and limitations on the reviews undertaken in
connection with rendering the opinion. Moelis provided its
opinion for the information and assistance of the special
committee in connection with its consideration of the merger
agreement. The Moelis opinion is not a recommendation as to how
any holder of our common stock should vote with respect to the
merger or any other matter. Under the terms of the engagement
letter between Moelis and GLG, GLG agreed to pay Moelis
(i) a nonrefundable work fee of $500,000 which will be
offset, to the extent previously paid, against the transaction
fee described below, (ii) an opinion fee of
$1.5 million, which became payable upon delivery of the
Moelis opinion described above, and which fee will be offset, to
the extent previously paid, against the transaction fee and
(iii) a transaction fee of $4.5 million plus 0.6% of
the equity value (as defined in the engagement letter) in excess
of the equity value implied at a price of $4.50 per share
payable upon the closing of the transaction.
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Opinion
of Goldman Sachs International (Page 46 and
Appendix E)
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Goldman Sachs International delivered its oral opinion, which
was subsequently confirmed in writing, to the GLG board of
directors that, as of May 17, 2010 and based upon and
subject to the factors and assumptions set forth in its written
opinion, the Aggregate Consideration (described under
Special Factors Opinion of GLGs
Financial Advisor) to be paid to the holders (other than
Man and its affiliates) of shares of GLG common stock, FA Sub 2
exchangeable shares and convertible notes pursuant to the share
exchange agreement and merger agreement was fair from a
financial point of view to such holders.
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The full text of the written opinion of Goldman Sachs, dated
May 17, 2010, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as
Appendix E. Goldman Sachs provided its opinion for the
information and assistance of the GLG board of directors in
connection with its consideration of the transactions
contemplated by the share exchange agreement and the merger
agreement. The Goldman Sachs opinion is not a recommendation as
to how any holder of shares of GLG common stock, FA Sub 2
exchangeable shares
and/or
convertible notes should vote with respect to the share exchange
agreement and the merger agreement or any other matter. Pursuant
to an engagement letter between GLG and Goldman Sachs, GLG has
agreed to pay Goldman Sachs a transaction fee of approximately
$4 million, with $1 million of the transaction fee
having been payable upon the execution of the share exchange
agreement and merger agreement and the remainder of the fee
being payable upon consummation of the share exchange and the
merger.
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6
Restrictions
on Solicitations of Other Offers (Page 101)
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We have agreed not to, and to cause our subsidiaries not to, and
to not authorize or permit our or our subsidiaries
officers, directors, employees, advisors, agents and
representatives to:
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solicit, facilitate or encourage the making of an alternative
takeover proposal involving 15% or more of our common stock or
other equity securities or assets; or
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engage in any negotiations or discussions with any third party
regarding such an alternative takeover proposal.
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However, if prior to the approval of the Merger Proposal by our
stockholders, we or our subsidiaries or our representatives
receive an unsolicited takeover proposal that does not involve a
breach of the merger agreement or any standstill agreement, and
our board of directors (or any authorized committee thereof)
reasonably determines in good faith (after consultation with
outside legal counsel and an outside financial advisor) that
such takeover proposal constitutes or is reasonably likely to
lead to a superior proposal (as described below
under The Merger Agreement Restrictions on
Solicitations of Other Offers) and its failure to take
action would be inconsistent with its fiduciary duties to our
stockholders, then we may engage in discussions and negotiations
regarding such takeover proposal if we comply with certain
requirements to provide information to Man.
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Conditions
to the Completion of the Merger (Page 107)
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Before completion of the merger, a number of closing conditions
must be satisfied or, to the extent permitted by law and the
merger agreement, waived. These conditions are described more
fully below under The Merger Agreement
Conditions to the Completion of the Merger and they
include, among others, obtaining GLG and Man stockholder
approvals (including the Minority Stockholder Approval),
obtaining any required governmental authorizations and the
absence of any law or governmental order prohibiting or
enjoining the merger. The Man stockholder approval was obtained
on September 1, 2010.
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If these and other conditions are not satisfied or, to the
extent permitted by law or the merger agreement, waived, the
merger will not be completed, even if our stockholders approve
the Merger Proposal.
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Termination
of the Merger Agreement (Page 108)
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The merger agreement may be terminated at any time by the mutual
written consent of us and Man, and under certain circumstances
by us or by Man, as more fully described below under The
Merger Agreement Termination of the Merger
Agreement.
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If the merger agreement is terminated, then the share exchange
agreement and the voting and support agreement will be
automatically terminated.
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If the Merger Proposal is not approved by our stockholders, or
if the merger is not completed for any other reason, our
stockholders will not receive any payment for their shares
pursuant to the merger agreement. Instead, GLG will remain as a
public company and our common stock will continue to be
registered under the Exchange Act and listed and traded on the
New York Stock Exchange. Under specified circumstances, we may
be required to pay Man a termination fee
and/or
reimburse Man for certain fees and expenses, or Man may be
required to pay us a termination fee or reimburse us for certain
fees and expenses, as described in The Merger
Agreement Termination Fees and Expense
Reimbursement.
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In addition, failure to complete the merger could have a
negative impact on the market price of our common stock, as the
price of those shares may decline to the extent that the current
market price reflects a market assumption that the merger will
be completed. We will be required to pay significant costs
incurred in connection with the merger, whether or not the
merger is completed. In addition, we may be obligated to pay Man
its
out-of-pocket
expenses
and/or a
termination fee if the merger is not completed for certain
reasons, as discussed below.
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7
Fees
Payable Upon a Termination of the Merger Agreement
(Page 110)
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We will be required to pay Man a termination fee equal to
$26 million (inclusive of any applicable value added tax or
its equivalent) if:
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(A) an alternative takeover proposal involving 15% or more
of our common stock or other equity securities or assets is made
to GLG or any third party announces an intention to make any
such proposal, and (B) following such event the merger
agreement is terminated as a result of certain specified events,
and (C) within nine (9) months of the date the merger
agreement is terminated, we enter into one or more definitive
agreements with respect to, or consummate a transaction
contemplated by, any alternative takeover proposal involving 40%
or more of our common stock or other equity securities or assets;
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the merger agreement has been terminated by Man because our
board of directors has either (x) withdrawn, qualified or
changed in a manner adverse to Man its recommendation that our
stockholders adopt the merger agreement or (y) failed to
reject a publicly disclosed alternative takeover proposal
involving 15% or more of our common stock or other equity
securities or assets and to reconfirm its recommendation that
the stockholders adopt the merger agreement following a request
from Man that it do so, or similar events occur, except in
certain circumstances; or
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we have terminated the merger agreement in order to enter into a
transaction pursuant to which a third party would acquire more
than 50% of our equity securities or all or substantially all of
our assets on terms and conditions which the board of directors
determines to be more favorable from a financial point of view
to our stockholders than the merger and the merger agreement,
and concurrently with such termination we enter into one or more
definitive agreements providing for such transaction.
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Man will be required to pay us a termination fee equal to
$26 million (inclusive of any applicable value added tax or
its equivalent) if Mans board of directors has either,
except in certain circumstances:
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not made a recommendation that Mans shareholders approve
the transactions contemplated by the merger agreement, the share
exchange agreement and the voting and support agreement in the
shareholder circular for the Man shareholders meeting
called for such purpose; or
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withdrawn, qualified or adversely modified such recommendation
once contained in the shareholder circular.
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Following the Man stockholder approval obtained on September 1,
2010, Man is no longer subject to this payment obligation.
Expense
Reimbursement (Page 110)
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If the merger agreement is terminated because the Statutory
Stockholder Approval and the Minority Stockholder Approval were
not obtained (except in certain circumstances), or because we
failed to perform or breached certain obligations under the
merger agreement, and no termination fee is payable by us to Man
at the time of such termination, we will be required to
reimburse Man for its
out-of-pocket
fees and expenses in connection with the proposed merger up to
$15 million. We will remain obligated to pay the
termination fee described above if it becomes payable, less the
amount of expenses actually paid by us to Man pursuant to the
previous sentence.
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If the merger agreement were terminated due to Mans
failure to obtain the affirmative vote of the holders of a
majority of Mans outstanding ordinary shares present and
voting at a meeting of its shareholders in favor of approving
the transactions contemplated by the merger agreement (except in
certain circumstances), Man would be required to reimburse us
for our
out-of-pocket
fees and expenses in connection with the proposed merger up to
$15 million. Following the Man stockholder approval
obtained on September 1, 2010, Man is no longer subject to this
reimbursement obligation.
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Share
Ownership of Directors and Executive Officers
(Page 130)
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As of August 30, 2010, the record date for the special
meeting, our directors and executive officers had the right to
vote, in the aggregate, 87,044,209 shares of our common
stock and 58,904,993 shares of our Series A voting
preferred stock, which together represented approximately 47.0%
of the combined voting power of our securities on the record
date for the special meeting.
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Pursuant to the terms of the voting and support agreement, the
Selling Stockholders and TOMS have agreed to vote their shares
of common stock and Series A voting preferred stock
FOR the Merger Proposal and FOR the
Adjournment Proposal.
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Our other directors and executive officers have informed us that
they intend to vote all of their shares of common stock
FOR the approval of the Merger Proposal and
FOR the Adjournment Proposal.
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As of the record date for the special meeting, our directors and
executive officers (other than the Selling Stockholders) had the
right to vote, in the aggregate, 8,491,340 shares of our
common stock, which represented approximately 2.7% of the
combined voting power of our securities on the record date for
the special meeting.
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Share
Exchange Agreement (Page 112 and Appendix B)
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Under the share exchange agreement, the Selling Stockholders
agreed with Man to exchange all of their shares of (a) our
common stock, (b) our Series A voting preferred stock,
(c) our subsidiary FA Sub 2 Limiteds exchangeable
Ordinary Class B Shares which are exchangeable into shares
of our common stock (at which time the associated Series A
voting preferred stock is redeemed), and (d) any other
shares of our capital stock or such exchangeable stock they
acquire after the date of the share exchange agreement, in
exchange for ordinary shares of Man at an exchange ratio of
1.0856 ordinary shares of Man per share of our common stock
exchanged by the Selling Stockholders (which ratio may be
reduced prior to closing under certain circumstances).
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The shares subject to the share exchange agreement will not
include any shares of our common stock acquired by a Selling
Stockholder upon conversion of our 5.00% dollar-denominated
convertible subordinated notes due 2014, or any shares of our
common stock acquired by a Selling Stockholder in the open
market prior to the date of the share exchange agreement.
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Before completion of the share exchange, which is expected to
occur immediately prior to the completion of the merger, a
number of closing conditions must be satisfied or waived. These
conditions are described more fully below under
Descriptions of Other Transaction Agreements
Share Exchange Agreement Conditions to the
Completion of the Share Exchange.
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Voting
and Support Agreement (Page 119 and
Appendix C)
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Under the voting and support agreement, the Selling Stockholders
and TOMS have agreed with Man and Merger Sub to vote or cause to
be voted all of the shares of our common stock and Series A
voting preferred stock held by them as of the date of the voting
and support agreement and acquired after such date, at any
meeting of our stockholders (or any adjournment thereof) or upon
any action by written consent in lieu of a meeting:
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in favor of the Merger Proposal;
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against any alternative takeover proposal involving 15% or more
of our consolidated assets or to which 15% or more of our
revenues or earnings on a consolidated basis are attributable,
acquisition of beneficial ownership of 15% or more of our
outstanding common stock, a tender offer or exchange offer that
if consummated would result in any third party owning 15% or
more of our outstanding common stock or merger, consolidation,
share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving us, in
each case other than the merger agreement, the transactions
contemplated by the merger agreement, the voting and support
agreement and the share exchange transaction; and
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against any agreement (including, without limitation, any
amendment of any agreement), amendment of our organizational
documents or other action that is intended or could reasonably
be expected to prevent, impede, interfere with, delay, postpone
or discourage the consummation of the merger.
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9
Warrant
Tender Offer (Page 77)
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We have agreed to, and to cause our subsidiaries to, use
reasonable best efforts to commence, prior to the closing date,
offers to purchase all of the outstanding warrants to purchase
shares of our common stock at a price of $0.129 per warrant. The
offers will be conditioned upon completion of the merger.
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Rights of
Appraisal (Page 145)
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Holders of our common stock who object to the merger may elect
to pursue their appraisal rights to receive the judicially
determined fair value of their shares, which could
be more or less than, or the same as, the per share merger
consideration for the common stock, but only if they comply with
the procedures required under Delaware law. In order to qualify
for these rights, you must (1) not vote in favor of the
Merger Proposal, nor consent thereto in writing, (2) make a
written demand to GLG for appraisal prior to the taking of the
vote on the adoption of the merger agreement at the special
meeting, (3) continue to hold your shares until the
consummation of the merger and (4) otherwise comply with
the Delaware law procedures for exercising appraisal rights. For
a summary of these Delaware law procedures, see Appraisal
Rights.
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An executed proxy that is not marked AGAINST or
ABSTAIN will be voted for approval of the Merger
Proposal and will disqualify the stockholder submitting that
proxy from demanding appraisal rights. A copy of
Section 262 of the General Corporation Law of the State of
Delaware is also attached as Appendix F to this proxy
statement. Failure to follow the procedures set forth in
Section 262 will result in the loss of appraisal rights.
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Market
Price of Our Common Stock (Page 133)
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On May 14, 2010, the last trading day before we announced
the execution of the merger agreement, the high and low sales
prices of our common stock were $2.99 and $2.90, respectively.
The merger consideration of $4.50 per share represents a premium
of approximately 55% over the closing trading price of $2.91 per
share on May 14, 2010, and approximately 41% over the
average closing prices of our common stock for the
30-trading
day period ending on May 14, 2010. On September 10,
2010, the most recent practicable date before the printing of
this proxy statement, the high and low reported sales prices of
our common stock were $4.48 and $4.47, respectively. On
May 14, 2010, the closing price of our publicly traded
warrants was $0.129. You are urged to obtain a current market
price quotation for our common stock.
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Material
United States Federal Income Tax Consequences
(Page 85)
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For U.S. federal income tax purposes, the receipt of the
cash merger consideration in exchange for shares of GLG common
stock in the merger by a U.S. holder will be a taxable
transaction. The amount of the gain or loss recognized will be
measured by the difference, if any, between the cash received in
the merger and the holders tax basis in the shares of GLG
common stock. Any gain realized by a
non-U.S. holder
as a result of the receipt of the cash merger consideration will
generally not be subject to U.S. federal income tax, except
in certain situations.
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None of GLG, Man, Holdco or Merger Sub will recognize any gain
or loss for U.S. federal income tax purposes as a result of
the merger.
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For U.S. federal income tax purposes, the receipt of
ordinary shares of Man by the Selling Stockholders in exchange
for shares of our common stock pursuant to the share exchange
agreement (and the receipt of cash by TOMS if it converts
convertible notes into shares of our common stock prior to the
merger) will be a taxable transaction even though the Selling
Stockholders are receiving ordinary shares of Man instead of
cash.
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You should consult your own tax advisor regarding the
U.S. federal income tax considerations relevant to the
merger, as well as the effects of your state, local and foreign
tax laws.
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10
QUESTIONS
AND ANSWERS ABOUT THE MERGER AND
THE SPECIAL MEETING OF STOCKHOLDERS
The following questions and answers are intended to address
briefly some commonly asked questions regarding the merger and
the special meeting. These questions and answers may not address
all questions that may be important to you as a GLG stockholder.
Please refer to the Summary Term Sheet and the more
detailed information contained elsewhere in this proxy
statement, the appendices to this proxy statement and the
documents referred to or incorporated by reference in this proxy
statement, which you should read carefully.
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When and where is the special meeting? |
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The special meeting will be held on October 12, 2010, at
10:00 a.m., Eastern Time, at the offices of
Chadbourne & Parke LLP, 30 Rockefeller Plaza, New
York, New York 10112. |
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Q: |
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What matters will be voted on at the special meeting? |
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At the special meeting and any postponements or adjournments
thereof, you will be asked to consider and vote on the following
matters: |
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To approve the Merger Proposal;
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To approve the Adjournment Proposal; and
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To transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
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Who is entitled to attend and vote at the special meeting? |
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Stockholders of record holding GLGs voting securities as
of the close of business on August 30, 2010, the record
date for the special meeting, are entitled to vote at the
special meeting. As of the record date, there were
251,883,013 shares of GLG common stock outstanding and
58,904,993 shares of Series A voting preferred stock
outstanding. Every holder of GLG common stock is entitled to one
vote per share of our common stock held as of the record date
and every holder of GLGs Series A voting preferred
stock is entitled to one vote per share of our Series A
voting preferred stock held as of the record date. |
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If you want to attend the special meeting and your shares are
held in street name by your broker, bank or other
nominee, you must bring to the special meeting a proxy from the
record holder (your broker, bank or other nominee) of the shares
authorizing you to vote at the special meeting. |
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What constitutes a quorum for the special meeting? |
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The presence in person or by proxy of a majority of the combined
shares of our common stock and Series A voting preferred
stock outstanding on the record date is required for a quorum.
Shares that are voted FOR, AGAINST, or
ABSTAIN a matter are treated as being present at the
special meeting for purposes of establishing a quorum. In the
event that there are not sufficient shares present for a quorum,
the special meeting may be adjourned in order to permit further
solicitation of proxies. However, the presence in person or by
proxy of the Selling Stockholders and our other directors and
executive officers, who collectively hold approximately 51.5% of
the combined shares of our common stock and Series A voting
preferred stock as of the record date for the special meeting,
will assure that a quorum is present at the meeting. |
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What vote is required to approve the Adjournment Proposal? |
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Approval of the Adjournment Proposal requires the affirmative
vote of the holders of a majority of the combined shares of our
common stock and Series A voting preferred stock, voting as
a single class, present in person or by proxy and entitled to
vote on the matter. |
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Who is soliciting my vote? |
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The enclosed proxy is being solicited on behalf of our board of
directors for use in voting at the special meeting, including
any postponements or adjournments thereof. We are paying for the
proxy solicitation. In addition, we have retained Morrow &
Co., LLC, Stamford, Connecticut, which we refer to as
Morrow, to assist in the solicitation. We will pay
Morrow $10,000 plus
out-of-pocket
expenses for its assistance. Our directors, officers and
employees may also solicit proxies by personal interview, mail,
e-mail,
telephone, facsimile or by other means of communication. These
persons will not be paid additional compensation for their
efforts. We will also request brokers and other fiduciaries to
forward proxy solicitation material to the beneficial owners of
shares of our common stock that the brokers and fiduciaries hold
of record. We will reimburse them for their reasonable
out-of-pocket
expenses. |
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What do I need to do now? |
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After you carefully read this proxy statement, please consider
how the merger affects you and then vote or provide voting
instructions as described below. Even if you plan on attending
the special meeting, we urge you to vote now by giving us your
proxy. This will ensure that your vote is represented at the
meeting. If you do attend the special meeting, you can change
your vote at that time, if you then desire to do so. Do NOT
enclose or return your stock certificate(s) with your proxy. |
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How do I vote my shares? |
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You may vote using one of the following methods if you hold your
shares in your own name as stockholder of record: |
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Internet. You may submit a proxy
to vote on the Internet up until 11:59 p.m. Eastern Time on
October 11, 2010 by going to the website for Internet
voting on your proxy card (www.proxyvote.com) and following the
instructions on your screen. Have your proxy card available when
you access the web page. If you vote by the Internet, you should
not return your proxy card.
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Telephone. You may submit a proxy
to vote by telephone by calling the toll-free telephone number
on your proxy card, 24 hours a day and up until
11:59 p.m. Eastern Time on October 11, 2010, and
following the prerecorded instructions. Have your proxy card
available when you call. If you vote by telephone, you should
not return your proxy card.
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Mail. You may submit a proxy to
vote by mail by marking the enclosed proxy card, dating and
signing it, and returning it in the postage-paid envelope
provided, or to GLG Partners, Inc.,
c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717 as long as your proxy card
is received prior to the special meeting on October 12,
2010. If you own shares in various registered forms, such as
jointly with your spouse, as trustee of a trust or as custodian
for a minor, you will receive, and will need to sign and return,
a separate proxy card for those shares because they are held in
a different form of record ownership. Shares held by a
corporation or business entity must be voted by an authorized
officer of the entity.
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In Person. You may vote your
shares in person by attending the special meeting and submitting
your vote at the meeting.
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If you hold your shares in street name through a
broker, bank or other nominee, then you received this proxy
statement from the nominee, along with the nominees
instruction card which includes voting instructions and
instructions on how to change your vote. |
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How will my proxy be voted? |
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If you use our Internet or telephone voting procedures or duly
complete, sign and return a proxy card to authorize the named
proxies to vote your shares, your shares will be voted as
specified. If your proxy card is signed but does not contain
specific instructions, your shares will be voted as recommended
by our board of directors FOR the Merger Proposal
and FOR the Adjournment Proposal. In addition, if
other matters come |
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before the special meeting, the persons named as proxies will
vote in accordance with their best judgment with respect to such
matters. |
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If my shares are held in street name, how will my
broker, bank or other nominee vote? |
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If your broker, bank or other nominee is the holder of record of
your shares (i.e., your shares are held in street
name), you will receive voting instructions from the
holder of record. You must follow these instructions in order
for your shares to be voted. We urge you to instruct your
broker, bank or other nominee how to vote your shares by
following those instructions. The broker, bank or other nominee
is required to vote those shares in accordance with your
instructions. If you do not give instructions to the broker,
bank or other nominee, the broker, bank or other nominee may
not have discretion to vote your shares with respect to
the proposals. |
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In addition, because any shares you may hold in street
name will be deemed to be held by a different stockholder
than any shares you hold of record, shares held in street name
will not be combined for voting purposes with shares you hold of
record. To be sure your shares are voted, you should instruct
your broker, bank or other nominee to vote your shares. |
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May I revoke my proxy? |
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For stockholders of record, whether you vote via the Internet,
by telephone or by mail, you may revoke your proxy at any time
before it is voted at the special meeting by: |
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delivering a written notice of revocation to the
Secretary of GLG;
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casting a later vote using the Internet or telephone
voting procedures;
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submitting a properly signed proxy card with a later
date; or
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voting in person at the special meeting.
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If your shares are held in street name, you must
contact your broker, bank or other nominee to revoke your proxy.
Your proxy is not revoked simply because you attend the special
meeting. |
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Will my vote be confidential? |
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It is our policy to keep confidential all proxy instructions and
proxy cards, ballots and voting tabulations that identify
individual stockholders, except as may be necessary to meet any
applicable legal requirements and, in the case of any contested
proxy solicitation, as may be necessary to permit proper parties
to verify the propriety of proxies presented by any person and
the results of the voting. The independent inspector of election
and any employees involved in processing proxy instructions and
cards or ballots and tabulating the vote are required to comply
with this policy of confidentiality. |
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What do I do if I receive more than one proxy or set of
voting instructions? |
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If you receive more than one proxy, it means that you hold
shares that are registered in more than one account. To ensure
that all of your shares are voted, you will need to submit each
proxy you receive. |
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When is the merger expected to be completed? |
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We are working toward completing the merger as quickly as
possible, and we anticipate that it will be completed by early
October 2010 or as soon as practicable thereafter. In order to
complete the merger, we must obtain GLG and Man stockholder
approvals (including the Minority Stockholder Approval) and the
other closing conditions under the merger agreement must be
satisfied or, to the extent permitted by law and the merger
agreement, waived. The Man stockholder approval was obtained on
September 1, 2010. See The Merger Agreement
Conditions to the Completion of the Merger. |
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Should I send my stock certificate now? |
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No. After the merger is completed, you will be sent a
letter of transmittal with detailed written instructions for
exchanging your shares of GLG common stock for the merger
consideration. If your shares are held in street
name by your broker, bank or other nominee you will
receive instructions from your broker, bank or other nominee as
to how to effect the surrender of your street name
shares in exchange for the merger consideration. Please do
not send your certificates now. |
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How can I obtain additional information about GLG? |
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A: |
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GLG maintains an Internet website at www.glgpartners.com. Our
annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to such reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act, along with our
annual report to stockholders and other information related to
GLG filed with the Securities and Exchange Commission
(SEC), are available free of charge on this site as
soon as reasonably practicable after we electronically file or
furnish this information with the SEC. The information provided
on our website is not part of this proxy statement, and
therefore is not incorporated by reference herein, except to the
extent expressly set forth below under Incorporation by
Reference. |
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Who can help answer my questions? |
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If you have additional questions about the merger or the other
proposals to be voted on at the special meeting after reading
this proxy statement or need assistance voting your shares,
please call our proxy solicitor, Morrow, toll-free at
800-607-0088.
Banks and brokers should contact Morrow at
203-658-9400. |
14
SPECIAL
FACTORS
Background
of the Merger
Prior to becoming a U.S. publicly traded company in
November 2007, GLG explored various alternative transactions and
engaged in substantive discussions with Man, among others,
concerning a potential transaction involving the two companies.
Although no transaction was pursued at the time, Man and GLG
executives continued to have regular interactions at industry
conferences and other industry-related events. In addition, each
of Messrs. Roman and Clarke is presently a trustee of The
Hedge Fund Standards Board.
During 2008, the complexion of GLGs business changed
substantially against a backdrop of redemptions by investors,
severe capital market dislocations, and decreased investment
performance. In response to this and significant declines in
GLGs own assets under management (AUM), GLG
undertook various initiatives and weighed strategic options to
strengthen its platform. Among these was the April 2009
acquisition of Société Générale Asset
Management UK (SGAM UK), which added approximately
$7.0 billion of AUM, including approximately
$3.0 billion of AUM that GLG had been managing under a
sub-advisory
arrangement with SGAM UK since the December 2008 announcement of
the SGAM UK acquisition. While the acquisition of SGAM UK and
other measures increased GLGs overall AUM and improved its
cost structure, profitability remained below historical levels,
reflecting greater representation of long-only AUM and fewer
funds and managed accounts in a position to earn performance
fees. At the same time, GLGs infrastructure and asset
management capabilities continued to be able to support much
greater AUM. These factors, together with concerns regarding the
potentially protracted recovery of higher fee-yielding assets,
uncertainty about the prospects of geographic expansion outside
of GLGs historic U.K. and European markets and a
challenging macroeconomic environment, led the Individual
Principals to discussions among themselves during 2009 as to
whether GLG should seek a strategic alliance or other
combination with another sizeable asset manager with a
complementary business.
Mans AUM also declined in 2008 and 2009 but throughout the
period Man reported a strong capital surplus. For example, for
the six months ended September 30, 2009, Man reported a
regulatory capital surplus of approximately $1.6 billion
and cash balances of approximately $2.1 billion and these
capital resources positioned Man strongly to address
opportunities in its industry and invest further in its
business. Of particular interest to Man in this regard were
growth opportunities, including through acquisition, consistent
with Mans strategy to acquire high quality discretionary
investment management capability providing the potential to
broaden the range of diversified, liquid strategies for the
benefit of its investors and to provide a more diversified
source of income for Man shareholders.
In March 2009, Emmanuel Roman, Co-Chief Executive Officer of
GLG, met with Peter Clarke, Chief Executive Officer of Man, at
Mans offices in London to discuss generally areas where
their businesses might work together. The discussions between
the parties were general and preliminary, did not contain
specific details with respect to a transaction and did not
progress further at that time.
On May 15, 2009, Pierre Lagrange, Senior Managing Director
of GLG Partners LP and a member of GLGs board of directors
(the GLG Board), met Lance Donenberg, Head of
Strategic Investments for Mans Principal Strategies Group,
at Mans Chicago offices. Messrs. Lagrange and
Donenberg had preliminary discussions about the business
strategies of their respective companies. Thereafter,
Messrs. Lagrange and Donenberg continued to talk from time
to time; however, there were no specific discussions regarding
the structure of a potential transaction.
In September 2009, Mr. Roman asked representatives of
Goldman Sachs to help GLG develop an understanding of Mans
business and whether there may be potential for a business fit,
including an assessment of strategic rationale and a range of
possible transaction structures without focusing on any specific
structure.
On October 1, 2009, representatives of Goldman Sachs made a
presentation to Messrs. Lagrange and Roman to help them
develop a better understanding of Mans business and
whether there was potential for a business fit, including an
analysis of Mans business fundamentals and preliminary
valuation, strategic, structure and capital markets
considerations.
On October 7, 2009, John Rowsell, Head of Mans
Principal Strategies Group, called Mr. Lagrange to engage
in further preliminary discussions about their respective
companies, including about GLGs evolution, development and
infrastructure. The conclusion of these discussions was to have
a further meeting in person.
15
On November 4, 2009, Messrs. Rowsell, Donenberg and
Urs Alder, Head of Product Strategy for Mans Principal
Strategies Group, met with Messrs. Lagrange, Roman and Mark
Jones of GLG at GLGs offices in London, England and had
further preliminary discussions about the investments and
portfolios of their respective companies. The conclusion of
these discussions was to engage in discussions with respect to
the potential for a transaction.
In connection with Mans search for opportunities to
diversify its business, one of the topics discussed at the
annual strategic review meeting of the board of directors of Man
(the Man Board) in December 2009 was Mans
acquisition strategy, and GLG was identified as one of a number
of potential acquisition targets.
On January 21, 2010, Messrs. Clarke and Lagrange met
and had preliminary discussions about their respective
companies, potential opportunities for the businesses to work
together, the financial markets, Mans market positioning
and GLGs and Mans respective market penetration,
geographies and investment styles. The conclusion of these
discussions was to continue discussions on these same matters.
On January 24, 2010, Messrs. Lagrange and Donenberg
met at an industry conference and had further preliminary
discussions regarding possible strategic alternatives involving
the two companies, including joint or cross distribution
arrangements whereby the two companies would distribute each
others respective products, a non-controlling investment
by Man in GLG, and possible asset management joint ventures.
Mr. Lagrange inquired about Mans sales capabilities
and process during this meeting.
On February 4, 2010, Messrs. Lagrange, Roman and Noam
Gottesman, Chairman and Co-Chief Executive Officer of GLG, met
with Messrs. Clarke and Rowsell to discuss whether there
was sufficient interest in pursuing a possible transaction to
warrant a preliminary exchange of information between Man and
GLG for due diligence purposes.
On February 9, 2010, Mr. Roman met with
representatives of Goldman Sachs to inform them about the
exploratory discussions held between GLGs and Mans
principals regarding possible strategic alternatives involving
the two companies described above.
On February 12, 2010, Alejandro San Miguel, the General
Counsel and Corporate Secretary of GLG, received a call from
Stephen Ross, the General Counsel of Man. Mr. Ross informed
Mr. San Miguel that Man was in the process of
retaining bankers and counsel to evaluate a possible transaction
between the two companies and that he would be arranging for
delivery to Mr. San Miguel of a draft of a mutual
non-disclosure agreement. Thereafter, Mr. San Miguel
advised Messrs. Gottesman, Roman and Lagrange of his call
with Mr. Ross and engaged Chadbourne & Parke LLP
to assist in negotiating the mutual non-disclosure agreement. On
the same day, Mr. Roman communicated to
Messrs. Gottesman, Lagrange and San Miguel that he
proposed that GLG appoint Goldman Sachs as its financial advisor
in connection with the transaction.
On February 16, 2010, Man delivered an initial draft of the
mutual non-disclosure agreement to Mr. San Miguel.
On February 22, 2010, at a meeting of the GLG Board,
Messrs. Gottesman, Roman and Lagrange reported to the other
board members the substance of their preliminary discussions
with Man and their desire to initiate exploratory discussions
regarding a possible transaction with Man.
Mr. San Miguel reported on his conversation with
Mr. Ross and the terms of the draft mutual non-disclosure
agreement delivered to him by Man. The GLG Board authorized
execution of a mutual non-disclosure agreement and a limited
exchange of information but reserved judgment on the issue as to
whether GLG should allow full due diligence on GLG or conduct
full due diligence on Man until further analysis of issues
relating to any possible transaction had been developed.
On February 23, 2010, representatives of Goldman Sachs
delivered to Messrs. San Miguel and Rojek presentation
materials containing a review of GLG and Man financial
projections based on research analyst estimates, preliminary
financial analyses, including market performance, selected
companies and pro forma transaction analyses and analysis at
various prices, a discussion of potential sources of synergies
and preliminary areas of investigation of Man.
On February 25, 2010, Messrs. Clarke and Lagrange
spoke by telephone about GLGs governance process in
relation to a possible transaction.
16
Also on February 25, Messrs. San Miguel, Jones
and Jeffrey Rojek, Chief Financial Officer of GLG, met with
Messrs. Ross and Jasveer Singh, Head of Legal of Man, to
discuss the mutual non-disclosure agreement and process matters
relating to timing, accounting reconciliation,
U.S. securities registration requirements and other
matters, including regulatory approvals and other deal mechanics
based on various hypothetical transaction structures.
Over the course of the following week, several drafts of the
non-disclosure agreement were exchanged and its terms
negotiated, including the addition of a standstill provision
restricting Mans ability to make a proposal to acquire GLG
without the consent of GLG for a period of eighteen months
following the execution of the non-disclosure agreement. GLG and
Man entered into a mutual non-disclosure and standstill
agreement dated as of March 1, 2010.
Between March 2 and March 26, 2010,
Messrs. San Miguel and Rojek provided informal updates
from time to time to non-executive members of the GLG Board
regarding the status of discussions with Man. During the same
period, Messrs. Clarke and Lagrange had phone calls from
time to time to discuss the status of the discussions between
the two companies.
On March 5, 2010, Messrs. Gottesman, Roman and
San Miguel spoke by telephone with Mr. Clarke to
discuss establishing a process for structuring a possible
transaction involving GLG and Man. The representatives of GLG
also stated that any transaction should have a significant stock
component in the consideration. The parties also discussed that
the Individual Principals should become significant shareholders
of Man as a result of any transaction in order to align their
interests with those of shareholders post-acquisition. The GLG
representatives suggested that therefore, Man should consider
registering its shares for issuance in order to facilitate a
share-for-share
exchange, even if Man subsequently decides to deregister the
shares. The GLG representatives also indicated that it was
important that there be a well thought out retention plan in
place below the board level before any announcement of a
transaction.
On March 6, 2010, representatives of Goldman Sachs had a
telephone discussion with Messrs. Roman, San Miguel, Rojek
and Jones regarding materials provided by Goldman Sachs
containing an updated review of GLG and Man financial
projections based on research analyst estimates and preliminary
financial analyses, including market performance, selected
companies and pro forma transaction analyses and analysis at
various prices.
On March 8, 2010, Messrs. Clarke, Ross and Singh of
Man and Messrs. Roman, Lagrange, San Miguel and Jones
of GLG met in London, England to discuss the structure of a
possible transaction involving the two companies. The GLG
representatives expressed their desire to structure any possible
transaction as a merger pursuant to which all holders of GLG
stock would receive cash and shares of Man at a negotiated
exchange ratio. Man representatives indicated their view that
GLGs proposed approach would not be viable because the Man
Board would not approve a transaction that would require Man to
register its shares in the U.S. and become subject to
reporting requirements under U.S. federal securities laws,
due to the significant costs and administrative effort required
to comply with both the U.K. and U.S. regulatory regimes,
given that Man is already subject to U.K. regulatory oversight
and review. Man indicated it would be willing to issue shares in
a transaction that was exempt from registration in the
U.S. and to pay part of the aggregate consideration in
cash. The Man representatives stated that in the case of a share
exchange the premium to GLG stockholders would be modest whereas
Man would be willing to pay a higher premium in a cash
transaction. The Man representatives also indicated that in any
transaction Man would require that the Individual Principals
receive Man ordinary shares in exchange for their shares of GLG
common stock and FA Sub 2 exchangeable shares in order
to align the interests of the Individual Principals with
Mans shareholders and also would require that each
Individual Principal agree to transfer restrictions on their Man
ordinary shares, non-competition covenants and other provisions
that would reflect a long-term commitment to, including by
taking ongoing roles in, the combined business by the Individual
Principals.
On March 9, 2010, the Man Board held a meeting at which
there was a discussion of a potential transaction with GLG and a
committee of the Man Board was established to further consider
such a transaction. Perella Weinberg Partners, Mans
financial advisor, also gave a presentation to the Man Board
regarding various financial analyses it had performed. See
Financial Analyses of the Financial Advisor to
Man below.
On March 10, 2010, representatives of Chadbourne and Weil,
Gotshal & Manges LLP, Mans U.S. counsel,
had a telephone call during which they discussed a transaction
structure in which all GLG stockholders would receive a
combination of cash and Man ordinary shares as consideration and
an alternative bifurcated structure in which the Selling
Stockholders would receive Man ordinary shares and the public
stockholders of GLG other than the Selling Stockholders (which
are referred to as the unaffiliated stockholders)
would receive cash as consideration.
17
On March 11, 2010, Messrs. San Miguel, Rojek and
Jones of GLG, Messrs. Ross, Singh, Oliver Stern, U.K. Legal
Counsel of Man, and Robert Aitken, Head of Global Compliance of
Man, and Ms. Orly Lax, Head of U.S. Legal &
Product Legal of Man, and representatives of Chadbourne, Weil,
Clifford Chance LLP, Mans U.K. counsel, and
Allen & Overy LLP, GLGs U.K. regulatory counsel,
met by teleconference to discuss whether a transaction could be
structured in compliance with applicable law whereby the
Principals would receive Man ordinary shares in exchange for
their shares of GLG common stock and FA Sub 2
exchangeable shares in a transaction exempt from registration
under U.S. securities laws, and the unaffiliated
stockholders would receive cash in a merger. During the
teleconference, the participants also discussed procedures that
Chadbourne representatives indicated they believed would be
advisable to protect the unaffiliated stockholders, if the
parties pursued a transaction based upon such a structure,
including establishing a special committee to negotiate any
possible transaction and requiring that there be a nonwaivable
condition in any merger agreement that holders of a majority of
the outstanding shares of GLG common stock (other than the
Selling Stockholders, Man, GLG and their respective affiliates
(with certain exceptions) and employees of GLG) approve the
merger. Clifford Chance had previously provided legal advice to
GLG and its affiliates with respect to U.K. employment and
partnership law matters, and GLG and Man waived conflicts with
regard to Clifford Chances representation of Man in the
transaction.
On March 15, 2010, representatives of Goldman Sachs and
Perella Weinberg had an introductory teleconference with respect
to a potential transaction between Man and GLG. Also on
March 15, representatives of Goldman Sachs delivered a
preliminary due diligence list on behalf of GLG to
representatives of Perella Weinberg.
On March 17, 2010, representatives of Perella Weinberg
delivered a preliminary due diligence list on behalf of Man to
representatives of Goldman Sachs.
On March 18, 2010, Mr. San Miguel informed
Mr. Ross by telephone that the GLG Board would not permit
management to commence discussions with Man concerning a
potential transaction until some indication of Mans
proposed valuation of GLG was made but would permit due
diligence sufficient for Man to develop such an indication.
On March 19, 2010, representatives of Chadbourne and Weil
had a telephone call during which they discussed the feasibility
of a bifurcated transaction structure between Man and GLG and
certain due diligence matters.
On March 22, 2010, Messrs. Clarke, Ross and Singh met
with Messrs. Roman, Lagrange and Jones to discuss
Mans and GLGs respective business, preliminary areas
where synergies may be explored, possible forms of bifurcated
deal structure and a high level approach to due diligence.
On March 23, 2010, Messrs. Roman, Lagrange, Clarke and
Martin Franklin, a director of GLG who was in London on other
business, had a meeting in London to make personal introduction
between Messrs. Franklin and Clarke. The parties discussed
Mans and GLGs respective businesses and that
appropriate governance procedures to ensure fairness would be
necessary if discussions were to proceed.
On March 24, 2010, representatives of Perella Weinberg and
Goldman Sachs met to discuss process matters and potential
transaction structures involving a share exchange and a merger.
Goldman Sachs representatives communicated GLGs
expectations that there be a significant premium paid to
GLGs unaffiliated stockholders in any transaction.
Between March 16 and March 26, 2010, representatives and
various advisors of GLG and Man conducted limited due diligence,
and the legal advisors of Man and GLG held conference calls to
discuss potential forms of bifurcated transaction structures.
During this period, directors of GLG continued informal
discussions among themselves regarding the advisability of
pursuing a transaction with Man and on what terms such a
transaction would be acceptable. The Individual Principals also
communicated to other directors of GLG their expectation that if
a bifurcated structure involving a share exchange and a cash
merger were pursued, the unaffiliated stockholders receiving
cash would receive a significant premium over GLGs current
share price, whereas the Individual Principals and any others
who might receive Man ordinary shares would only receive a
modest premium.
On March 26, 2010, representatives of Perella Weinberg
notified representatives of Goldman Sachs that Bloomberg News
had published an article about Mans search for an
acquisition target, noting that GLG was named as a potential
target. Other news publications subsequently published similar
articles. The GLG Board met by conference call to discuss the
press articles and Mans disclosure obligations arising as
a consequence of such press
18
articles in the United Kingdom. Later that day and prior to the
opening of trading in New York, GLG formally discontinued
further discussions with Man. In making a decision to
discontinue discussions, the GLG Board took into account the
fact that discussions were in very preliminary stages and that
Bank of America Merrill Lynch, Mans U.K. listed company
corporate broker, had informed GLG that the U.K. Listing
Authority (UKLA) had taken the position that, in
light of the media speculation, Man must publicly affirm if it
continued to be in discussions with GLG. The GLG Board concluded
that it had not reached sufficient consensus to consider
pursuing a transaction and that discussions with Man were so
preliminary that they did not warrant public disclosure to that
effect. Between March 26 and March 28, 2010
Messrs. Clarke and Lagrange exchanged telephone messages
before finally speaking by telephone about the discontinuation
of discussions.
On March 29, 2010, the above-mentioned Man Board committee
held a meeting in which they noted the discontinuation of both
discussions with GLG and the preparatory work done in connection
with a potential transaction.
In the month following the publication on March 26, 2010 of
the various press articles speculating about a possible
transaction between GLG and Man, GLG was contacted by several
investment banking firms offering their services in connection
with a potential transaction. No alternative potential bidders
for GLG emerged during this time frame or subsequently.
On April 14, 2010, representatives of Goldman Sachs
initiated a meeting with representatives of Perella Weinberg. At
the meeting, the two firms reviewed the recently discontinued
discussions between GLG and Man.
On April 26, 2010, the Man Board held a meeting at which
Mr. Clarke was authorized to re-engage GLG with regards to
a potential transaction and, in connection with a management
presentation, Perella Weinberg discussed various financial
analyses it performed with the Man Board (see
Financial Analyses of the Financial Advisor to
Man). The Man Board determined that the structure should
not require Man to register its shares in the U.S. and
become subject to reporting requirements under U.S. federal
securities laws, due to the significant costs and administrative
effort required to comply with both the U.K. and
U.S. regulatory regimes, as Man is already subject to U.K.
regulatory oversight and review. The Man Board agreed that Bank
of America Merrill Lynch should inform the UKLA at the
appropriate time of Mans re-engagement with GLG.
On April 26, Mr. Clarke called Mr. Lagrange to
advise him that Man was still interested in a possible
transaction with GLG and that he had received approval from the
Man Board to seek to re-engage GLG in discussions regarding a
possible transaction. Mr. Clarke indicated that Man would
be prepared to present a written non-binding expression of
interest that would have a bifurcated structure involving a
share exchange with the Selling Stockholders for their shares of
GLG common stock and FA Sub 2 exchangeable shares and a
cash merger with the unaffiliated stockholders. He indicated
that the Man Board had definitively determined it would not
pursue any transaction that would require Man to register its
shares in the U.S. Mr. Lagrange communicated this
information to members of the GLG Board and members of GLG
management who had been involved in the prior discussions with
Man. The GLG Board members suggested to management that outside
counsel to Man and GLG discuss the key terms of the proposed
expression of interest letter before it was submitted and
authorized management to request a written expression of
interest if the legal advisors confirmed that the content was
consistent with what had been generally described to
Mr. Lagrange.
On April 27, 2010, representatives of Chadbourne and Weil
held a teleconference during which Weil described the key terms
of the expression of interest, the proposed structure and the
rationale for the structure. The outside counsel then reported
back to their respective clients and Mr. Lagrange notified
Mr. Clarke that a written expression of interest could be
sent by Man.
On April 28, 2010, Man submitted a letter signed by Kevin
Hayes, Finance Director of Man, to GLGs Chairman and Board
indicating a non-binding expression of interest to negotiate a
transaction or related transactions pursuant to which Man or one
of its subsidiaries would propose to acquire 100% of GLG. The
proposed structure involved two separate but related
transactions each of which was conditioned on the other. For the
first transaction, Man would negotiate an agreement with the
Selling Stockholders pursuant to which the Selling Stockholders
would be issued Man ordinary shares in exchange for their GLG
securities. Man also proposed discussing with the Individual
Principals at a later stage their continued involvement in the
post-closing business and the associated incentive and
retention/lock-up arrangements.
19
For the second transaction, Man proposed a merger agreement
pursuant to which the unaffiliated stockholders of GLG would
receive cash consideration for their shares of GLG common stock
in a merger. Mans letter indicated its expectation that if
the parties pursued such a transaction, GLG would establish a
special committee of independent directors to review and approve
or reject the proposed transaction on behalf of GLGs
unaffiliated stockholders, and that such special committee would
retain its own legal and financial advisors. Man indicated that
it expected the transaction to be fully contingent on the
unanimous approval of a special committee.
Mans non-binding letter proposed to offer (a) an
exchange of Man ordinary shares for the Principals shares
of GLG common stock in connection with the share exchange at an
exchange ratio representing a value of $3.40 per share of GLG
common stock; and (b) cash to GLGs unaffiliated
stockholders in a cash merger on the basis of a $3.75 per share
of GLG common stock. Man noted that its proposed price per share
offer to GLG unaffiliated stockholders represented a premium of
40% over GLGs closing stock price on March 25, 2010,
which was one day prior to the beginning of media speculation
about a transaction involving Man and GLG. Man proposed to pay
the entire cash consideration in the cash merger from its
available cash resources, and therefore, to include no financing
contingency in the merger agreement.
Man also proposed a target date for entering into definitive
agreements and announcing the transactions of no later than
May 26, 2010 to coincide with the announcement of
Mans 2010 annual results.
In the afternoon of April 28, the GLG Board held a meeting
by teleconference to review and discuss Mans expression of
interest. At the meeting, Mr. San Miguel provided an
outline of Mans letter to members of the GLG Board,
highlighting the key terms of Mans proposal.
Mr. San Miguel noted that the expression of interest
was non-binding and stated that Man proposed discussing with the
Individual Principals at a later stage their continued
involvement in the post-closing business and the associated
incentive and retention/lock-up arrangements.
Mr. San Miguel advised that the Individual Principals
would not seek to negotiate their personal employment
arrangements (which would be expected to have beneficial as well
as restrictive terms for the Individual Principals) until the
principal terms and conditions of any transaction had been
established. The directors discussed the advisability of
establishing a special committee, but each director indicated a
desire to review and consider the expression of interest
independently before further consideration by the GLG Board. The
directors decided to meet on April 29, 2010 to have a more
formal discussion of the expression of interest and to determine
whether to establish a special committee of the GLG Board to
consider whether or on what terms to pursue discussions with Man.
On April 29, 2010, Mr. Clarke called Mr. Lagrange
to confirm that Mr. Lagrange had received the non-binding
letter from Man.
On April 29, 2010, the GLG Board, with members of
GLGs senior management and representatives of Chadbourne
present, met to discuss the letter submitted by Man.
Mr. San Miguel presented a summary of the terms of the
letter and provided background information relating to the
letter. Mr. Rojek made a presentation regarding Man and its
business based on materials prepared by Goldman Sachs.
Representatives of Chadbourne made a presentation regarding the
fiduciary duties of the directors under Delaware law.
Mr. San Miguel disclosed potential client conflicts
for legal advisers in connection with the possible transaction
with Man. Mr. San Miguel indicated that
Allen & Overy, which regularly provides GLG and its
subsidiaries with U.K. law advice on matters unrelated to the
potential transaction, was proposed to represent the Principals
in connection with the possible transaction and to advise GLG on
technical U.K. legal and regulatory matters relating to the
potential transaction. He also reported that Chadbourne, which
regularly represents GLG and its affiliated entities on various
matters, was proposed to represent GLG in connection with the
potential transaction. Mr. San Miguel also noted that
Leslie J. Schreyer and Jeffrey A. Robins, each a partner of
Chadbourne, were the trustees of the Gottesman GLG Trust and the
Roman GLG Trust, respectively, and that Chadbourne represents
other Principals from time to time. The GLG Board waived any
conflicts of interest of Allen & Overy and Chadbourne
as legal advisors to GLG in connection with the possible
transaction arising out of their representation of, or roles
within, some or all of the Principals.
Mr. San Miguel also reported that, although not
formally engaged by GLG, Goldman Sachs had provided GLGs
management with assistance in evaluating Man and a possible
transaction with Man and through that work was familiar with GLG
and its business. He noted that while a special committee would
be empowered to engage its own financial advisor, GLG would be
interested in engaging its own financial advisor to assist GLG
in connection with a potential transaction with Man,
particularly with respect to diligence matters and delivery of a
fairness opinion, and proposed engaging Goldman Sachs, subject
to Goldman Sachs not otherwise having a conflict of interest,
and subject to negotiation of acceptable terms of engagement.
20
At the April 29, 2010 meeting and, pursuant to ratification
and approval at the May 16, 2010 meeting, the GLG Board
established the special committee consisting of Ian Ashken,
William Lauder and James Hauslein, each of whom is an
independent director of GLG under New York Stock Exchange rules
and each of whom affirmed that he was free of any material
direct or indirect interest in, or relationship with, Man or its
affiliates, the Principals or any other person or group which
could be deemed to be controlling stockholders of GLG (and their
affiliates), and did not expect to have any material interest in
or involvement with (other than as a GLG Board member and holder
of GLG securities) the possible transaction with Man. The GLG
Board granted the special committee the authority to take the
actions described in Fairness of the Merger
and Recommendations of the Special Committee and the GLG
Board The Special Committee, including broad
powers to review, negotiate and recommend or reject the possible
transaction or any alternative transaction. The GLG Board also
granted the special committee the authority to select and retain
its own financial advisor and legal counsel and such other
consultants and agents to perform such other services as it may
deem necessary, to obtain such opinions as the special committee
may request and to determine whether to waive any conflicts
relevant to the possible transaction or any other transaction.
In addition, the GLG Board delegated to the special committee
the right to waive the transfer restrictions under the terms of
the Shareholders Agreement dated June 22, 2007 among the
Selling Stockholders, other GLG stockholders party thereto and
GLG (the GLG Shareholders Agreement), which waivers
would be required in order to implement the transaction proposed
by Man. See Important Information Regarding the
Principals GLG Shareholders Agreement. The GLG
Board also authorized compensation and reimbursement for
out-of-pocket
expenses for members of the special committee. See
Interests of Certain Persons in the
Merger Compensation Paid to Members of the Special
Committee.
In the early afternoon on April 30, 2010,
Messrs. Ashken and Gottesman held a conference call with
Mr. Clarke in which they informed him that the special
committee had been formed and would meet later that day.
Later that same day, the special committee held a telephone
conference with representatives of Winston & Strawn
LLP present. Mr. Ashken was elected chair of the special
committee. Mr. Ashken reported to the special committee
that he had a conference call with Mr. Clarke earlier that
day during which he informed Mr. Clarke that the special
committee had been formed and would meet later that day. The
special committee then engaged Winston as legal counsel to the
special committee. Winston had on limited occasions in the past
provided legal advice to an affiliate of Man, which the special
committee determined did not impact Winstons independence.
After considering several candidates to serve as the special
committees financial advisor and determining that some
were conflicted, the special committee heard presentations from
Citigroup and Moelis & Company LLC. The special
committee then determined that Citigroup also was conflicted.
Moelis had not previously performed services for GLG, the
Principals or Man. The special committee considered the
experience and credentials of Moelis in providing financial
advice in similar situations and engaged Moelis as its financial
advisor.
Also on April 30, representatives of Chadbourne and Weil
had a telephone call in which Chadbourne advised Weil that
Winston had been selected as counsel and Moelis had been
selected as financial advisor to the special committee.
Chadbourne and Weil also discussed matters relating to deal
structure that should be addressed by the special committee,
including deal protection.
Also on April 30, representatives of Goldman Sachs
delivered to Messrs. San Miguel and Rojek presentation
materials containing preliminary financial analyses, including
implied transaction multiples and selected companies analyses
and analysis at various prices.
On May 1, 2010, the special committee held a meeting by
teleconference with Mr. San Miguel, Winston and
Moelis. Mr. San Miguel reviewed the history between
GLG and Man, and representatives of Winston reviewed with the
members of the special committee their duties and
responsibilities as members of the special committee and
relevant process matters.
Mr. San Miguel then left the meeting, and the special
committee and its advisors discussed strategies for evaluating
and responding to Mans letter. The special committee also
discussed the advisability of requiring that the vote of a
majority of the unaffiliated shares outstanding to approve any
transaction with Man and considered other ways to ensure the
fairness of a transaction to the unaffiliated stockholders. In
particular, the special committee and its advisors discussed the
possibility of negotiating a higher aggregate offer price from
Man, the potential for all stock consideration or a mix of stock
and cash consideration for the unaffiliated stockholders, an
increase in the premium to be paid to the unaffiliated
stockholders relative to the Selling Stockholders, and a share
21
price cap for the Selling Stockholders. The special committee
and its advisors also discussed possible market checks of
fairness of any offer from Man, including a broad pre-signing
auction process, a selected approach to potential buyers
pre-signing, a post-signing go shop period or a
carefully structured set of exceptions to deal protection
covenants that would enable the special committee to consider
potential topping bids post-signing. The special committee and
its advisors reviewed the terms of the warrants. The special
committee did not make any decisions on these issues at its May
1 meeting.
In the afternoon of May 1, Messrs. Rojek and Jones and
representatives of Goldman Sachs and Moelis had a conference
call with representatives of Man, including Messrs. Rowsell,
Hayes and Singh, and representatives of Perella Weinberg to
discuss potential opportunities for synergies from the
transaction and reiterate that there should be a significant
premium paid to the GLG stockholders in the context of a
transaction. Representatives of Moelis informed representatives
of Perella Weinberg that the special committee has been
considering, among other things, that GLGs stock had
historically traded in the mid-$4.00s per share range for a
substantial period of time and had reached a 52-week high
(including
intra-day
trading) of $4.61 per share and that the market price for shares
of many financial institutions were trending upwards.
In the evening of May 1, Mr. Jones called
representatives of Moelis to provide them with background on the
proposed transaction, including an estimate range of cost
synergies with a low case of approximately $40 million and
a high case exceeding $50 million.
In the morning of May 2, 2010, Messrs. Rowsell, Hayes,
Jones and Simon White, the Chief Operating Officer of GLG, and
representatives of Goldman Sachs and Perella Weinberg held a
meeting, which was joined by representatives of Moelis by
conference call, during which they discussed preliminary
possible cost synergy estimates, ranging from approximately
$53.5 to $60.6 million, which were presented by GLG as a
basis for discussion. In its May 17, 2010 press release
announcing the potential transaction, Man estimated the annual
potential cost savings to be approximately $50 million.
In the afternoon of May 2, Messrs. Rojek, Jones,
Rowsell and Hayes had a conference call with representatives of
Goldman Sachs, Moelis and Perella Weinberg regarding potential
opportunities for revenue synergies. Representatives of GLG
presented reasons for assigning a positive value to revenue
synergies in evaluating the transaction, but representatives of
Man expressed reservations as to such approach on the grounds
that such synergies would be difficult to quantify for two
companies with different compensation and pricing structures.
The parties reached no understanding regarding revenue synergies
that could be achieved in the transaction.
Also on May 2, the special committee had a meeting by
teleconference with Winston and Moelis. Moelis representatives
reported that GLGs preliminary estimates of expense
synergies discussed with GLG the day before indicated annual
savings with a low case of approximately $40 million. The
special committee also discussed that the Principals apparently
had engaged in discussions with Man regarding a transaction
potentially based on a
market-to-market
share exchange for the Principals that would include a modest
premium over the GLGs share price. Moelis and the special
committee determined that the best strategy for receiving the
highest value in any transaction would be to negotiate directly
with Man for the highest price and best transaction reasonably
available for the unaffiliated stockholders, rather than
negotiating for an increase in the aggregate consideration to be
paid by Man to the Selling Stockholders and unaffiliated
stockholders.
On May 2, representatives of Chadbourne and Weil had a
telephone call in which Chadbourne advised Weil that the special
committees chair would be initiating direct dialogue with
Man and that the special committee would be negotiating the
structure and terms of any potential transaction.
In the afternoon of May 2, Mr. Ashken called
Mr. Clarke to inform him that the special committee had
elected Mr. Ashken as its chair and that the special
committee had retained Moelis as its financial advisor and
Winston as its legal advisor.
Throughout the first two weeks of May, the Individual
Principals, representatives of each of GLG and Man including
Messrs. San Miguel, Rojek, White, Jones, Rowsell,
Hayes, Ross and Singh, and their various legal and financial
advisors met in person and by telephone conference to discuss
various due diligence and process matters.
On May 3, 2010, the GLG Board held a meeting for the
purpose of reviewing GLGs first quarter 2010 financial
results. At the meeting, the directors also discussed the
proposed transaction with Man and received a
22
report from the special committee and discussed the high yield
debt market conditions in considering alternatives for
refinancing its existing debt, which management of GLG had been
considering since February 2010.
The Man Board also held a meeting on May 3, in which the
directors discussed deal valuation, due diligence and regulatory
matters, and Perella Weinberg gave a presentation regarding
various financial analyses it had performed. See
Financial Analyses of the Financial Advisor to
Man.
Also on May 3, Mr. Ashken called Mr. Clarke to
advise that GLG was not for sale and that the terms proposed by
Man in its letter dated April 28, 2010, in particular the
offer of $3.75 per share, were inadequate for the unaffiliated
stockholders due to the fact that GLG common stock had traded as
high as $4.61 per share in the past year. Mr. Ashken also
informed Mr. Clarke that the special committee and its
advisors would need between one to two weeks to fully evaluate
whether GLG was prepared to enter into any strategic transaction
as well as to complete its due diligence review. Mr. Ashken
told Mr. Clarke that a transaction involving an exchange
offer to all holders, not just the Selling Stockholders, was
preferable from the special committees point of view and
that if such a transaction was not feasible the special
committee would be looking for a larger premium over market
prices as well as in comparison to the price to be paid to the
Selling Stockholders. Mr. Ashken indicated that in any
potential transaction, the special committee would be seeking
something in the range of $5.00 per share in cash. The special
committee chose this amount as a beginning price for
negotiations because this price provided a significant premium
over the current GLG stock price and the special committee
believed that a demand for a price above the $5.00 range could
cause Man to withdraw its offer. Mr. Clarke responded by
reiterating Mans position that it was unwilling to offer
its shares to all of GLGs stockholders because doing so
would require it to register its shares in the U.S., become
subject to reporting requirements under U.S. federal
securities laws, and consequently to incur the significant costs
and administrative effort required to comply with both the U.K.
and U.S. regulatory regimes. Mr. Clarke indicated that
a price of $5.00 per share would not be justified based on
Mans valuation analyses. Mr. Clarke also indicated
that the transaction would require a Man shareholder vote under
the U.K. listing rules.
On May 4, 2010, Bank of America Merrill Lynch advised the
UKLA that Man was considering a potential transaction with GLG.
On May 4, the Individual Principals and Mr. Clarke had
a call to discuss communication strategies.
Also on May 4, representatives of Weil and Winston had a
series of calls to discuss process matters and structuring
considerations for any potential transaction, including deal
protection.
On May 5, 2010, Mr. Roman advised the U.K. Financial
Services Authority that GLG was considering a potential
transaction with Man.
On May 5, Mr. San Miguel, representatives of
Chadbourne and Messrs. Schreyer and Robins, acting in their
capacities as trustees of the Gottesman GLG Trust and Roman GLG
Trust, respectively, met with representatives of
Allen & Overy to confirm Allen &
Overys retention as counsel to the Principals.
On May 6, 2010, Mr. Aitken advised the U.K. Financial
Services Authority that Man was considering a potential
transaction with GLG.
In the morning of May 6, representatives of Weil circulated
initial drafts of the merger agreement, the share exchange
agreement and the voting and support agreement to legal counsel
for the special committee, GLG and the Principals.
During the afternoon of May 6, the special committee held a
meeting with Winston and Moelis at Moeliss offices in New
York. Representatives of Winston described the duties and
responsibilities of the special committee throughout the process
of considering and negotiating any transaction. Mr. Ashken
reported to the special committee on his May 3, 2010
conversations with Mr. Clarke and informed the special
committee that Man had begun its detailed due diligence review.
Representatives of Moelis provided a preliminary update on their
due diligence and valuation work, noting that the absence of a
cash-flow analysis for both Man and GLG was not unusual for
companies in the alternative asset management industry. The
special committee and its advisors also discussed the
flash crash that was occurring in the stock market
during the course of their meeting.
The special committee and its advisors discussed various
potential structures for a potential transaction and the
implications of each of these structures, including possible
strategies for achieving the best transaction reasonably
available to GLGs unaffiliated stockholders, whether from
Man or another party. In particular, the special
23
committee and its advisors discussed the possibility of
conducting either a broad pre-signing auction process or a more
select approach to potential buyers pre-signing. Based on
discussions with management, the special committee recognized
that with the environment then to date in 2010 of investors
beginning to redeploy cash into alternative investments, any
rumored potential acquisition transaction or the announcement of
an acquisition transaction involving GLG could result in
significant postponement of both investments by new investors
and/or
additional investments by existing investors until the public
had more visibility on the outcome of any potential transaction.
In addition, the special committee members discussed the risk
that certain GLG funds and managed accounts require only short
periods of notice for redemptions
and/or the
key investment personnel could decide to serve notice to leave
GLG at any time, as well as the risk that GLGs proprietary
investment strategies might be revealed to potential bidders
during any due diligence process. As a result, the special
committee concluded that any pre-signing market check process,
whether broad or selective, that could lead to a disclosure of a
potential change of control transaction before the terms of any
such transaction had adequately been negotiated would create a
substantial risk of postponements of new or additional
investments in, or meaningful redemptions by investors from,
GLGs funds and managed accounts, a significant risk of the
loss of key investment personnel, the potential risk that
GLGs investment strategies may be revealed or otherwise
negatively impacted and a risk of losing the opportunity for a
transaction with Man with no assurance of another opportunity
for the unaffiliated stockholders to receive a premium
comparable to that offered by Man. The special committee noted
that although news of a potential transaction involving GLG and
Man had been the subject of rumor and speculation in the press
in March 2010, providing plenty of opportunities for other
potential bidders to approach GLG, no inquiries or expressions
of interest had been received other than inquiries from
investment bankers offering to assist GLG in any potential
transaction.
In consultation with its advisors, the special committee
determined that, given the level of premium to the current GLG
stock price that Man seemed willing to offer GLGs
unaffiliated stockholders, a focused process with Man that did
not include a grant of exclusivity would be an appropriate path
to pursue. The special committee discussed whether to request a
go-shop provision in the merger agreement and
determined that they did not believe a go-shop right
would be likely to result in a superior transaction, given the
economic and voting interest of the Selling Stockholders and the
importance to any buyer of retaining the Individual Principals
in an ongoing management role in GLGs business. After
consultation with its advisors, the special committee agreed
that a flexible, fair merger agreement with target-favorable
fiduciary out provisions would allow GLGs
unaffiliated stockholders to realize the benefits of an
attractive premium transaction while allowing GLG to consider
superior unsolicited third-party proposals. After a discussion,
the special committee authorized Moelis to continue its
valuation and due diligence activities and to pursue a potential
strategic transaction with Man on the terms and using the
approach discussed in the meeting, with goals of both achieving
a higher offer price from Man and a higher premium to be paid to
the unaffiliated stockholders relative to the price to be
received by the Selling Stockholders.
The special committee also discussed Winstons comments to
the drafts of the merger agreement, the share exchange agreement
and the voting and support agreement.
On May 10, 2010, the special committee held a meeting with
Winston and Moelis at Winstons New York offices. The
special committee and its advisors discussed the recent decline
of GLGs stock price as well as the recent dramatic
declines in the stock markets and the impact such declines might
have on a potential transaction, including the possibility that
Man could decide to withdraw or reduce its original proposal.
The special committee instructed the Moelis representatives to
request from Man and its financial advisor any and all
information that could yield better insight into the intrinsic
value of Mans ordinary shares and to assist the special
committee in analyzing such information.
The special committee also reviewed current drafts of the
transaction agreements with representatives of Winston and held
a general discussion regarding certain regulatory matters that
Man focused on in their due diligence review.
After the special committee meeting ended, the GLG Board held a
meeting by teleconference with Messrs. San Miguel and Rojek and
representatives of Winston and Chadbourne for the purpose of
receiving an update on the status of the special
committees negotiations.
Also on May 10, representatives of Winston circulated the
combined comments of Winston, Chadbourne and Allen &
Overy on the initial draft of the merger agreement.
24
On May 11, 2010, representatives of Allen & Overy
circulated the combined comments of Allen & Overy,
Winston and Chadbourne to the initial drafts of the share
exchange agreement and the voting and support agreement.
Representatives of Weil and Winston also had a telephone call to
discuss deal protection mechanisms and the approach on the
fairness opinions.
Also on May 11, Messrs. San Miguel and Rojek and
representatives of Chadbourne, Winston, and Allen &
Overy met by teleconference. The legal advisors collectively
concluded that because the merger agreement, on the one hand,
and the share exchange agreement and voting and support
agreement, on the other hand, each have closing conditions that
require that the other agreements closing conditions have
been satisfied and a number of other terms that are inextricably
linked to each other, counsel to the special committee, GLG and
the Principals would all participate in key teleconferences and
meetings with counsel to Man to negotiate key points in each
agreement on behalf of their respective clients and
constituencies.
On May 12, 2010, the Individual Principals and
Mr. Clarke had a call to discuss outstanding commercial
points relating to closing conditions and restrictive covenants
that impact the Individual Principals, as well as retention and
severance arrangements for key GLG employees, other than the
Individual Principals, whose services would be needed either to
complete the transaction or for purposes of GLGs business
post-closing.
Mr. Ashken (representing the special committee) and
Mr. Roman (representing the Principals) and
Messrs. Clarke and Singh of Man also met in person in
London on May 12 to discuss the status and terms of the proposed
transaction generally. During the course of the discussion, the
treatment of the outstanding warrants to purchase GLG common
stock was discussed. Mr. Ashken told Mr. Clarke that
based on the contractual terms of the warrants and the fact that
they were significantly
out-of-the-money,
the special committees intention was to value them at
zero, with the understanding that Man may decide in its
discretion to make an offer to purchase the warrants. The
parties discussed the fact that there were some potential issues
with having the warrants remain outstanding after the merger,
such as the potential of the surviving corporation remaining
subject to continued SEC reporting obligations after the merger,
the administrative burdens and expense of administering the
warrants that remain outstanding, and the potential for nuisance
claims from warrant holders whose warrants would be permanently
out-of-the-money
after the merger. Mr. Ashken also discussed proposed
severance and retention arrangements for key GLG personnel whose
services it was important to retain through closing.
Mr. Ashken stated his understanding that the value of any
such arrangements would be consistent with industry practice and
would not be material to the overall size of any transaction.
Mr. Ashken also asked Mr. Clarke to have Mans
representatives review matters relating to the warrants and
severance and retention arrangements with the advisors to the
special committee and GLG.
On May 12, Messrs. San Miguel, Rojek, Singh and
representatives of Weil, Winston, Chadbourne, Allen &
Overy and Clifford Chance had a series of calls to discuss the
draft transaction agreements, Mans shareholder circular
and various due diligence matters.
Also on May 12, Miriam McKay, Head of Investor Relations
for Man, and Andy Knox of Man had an initial meeting at Perella
Weinbergs London office with Messrs. Roman, Jones and
David Waller, Head of Communications for GLG, to discuss the
investor presentation to be distributed in connection with any
announcement of the proposed transaction. They met thereafter to
further refine the presentation.
On May 13, 2010, the special committee met by
teleconference with representatives of Winston and Moelis.
Mr. Ashken reported on his meeting with Mr. Clarke the
previous day. The special committee discussed Mans
positions and, in particular, the conditions to closing proposed
by Man and other items that might adversely affect the certainty
of the closing of the transactions.
Later that day, the GLG Board held a meeting by teleconference
with representatives of Winston for the purpose of receiving an
update on the status of the special committees
negotiations, including the special committees conclusion
that the warrants had no economic value based on their
contractual terms because pursuant to the terms of the warrants,
following the completion of the merger, holders of warrants, if
any, that remain outstanding will be entitled, subject to the
other terms and conditions thereof, to exercise their warrants
at an exercise price of $7.50 per warrant, but will only have
the right to receive upon such exercise an amount equal to the
cash merger consideration of $4.50 per warrant, thereby
incurring a loss of $3.00 per warrant.
25
Also on May 13, the Man Board held a meeting in which it
reviewed the due diligence exercise carried out in relation to
GLG, received a presentation by Perella Weinberg regarding
various financial analyses it had performed (see
Financial Analyses of the Financial Advisor to
Man) and approved the transaction with GLG subject to
final negotiations. The Man Board then appointed a new committee
consisting of Jon Aisbitt, Chairman of the Man Board, and
Mr. Clarke, who were authorized to finalize and execute the
transaction documents, subject to reaching agreement on the
consideration to be paid and satisfactory review of a number of
due diligence and other issues.
On May 13, Michael Robinson, Head of Global Human Resources
for Man, and Claire Morland, Head of Compensation and Benefits
for Man, had a conference call with Messrs. San Miguel
and Schreyer to discuss a proposal by GLGs management
regarding severance and retention arrangements for GLGs
key personnel other than the Individual Principals.
On May 14, 2010, Messrs. Ashken and Clarke spoke by
telephone to discuss the status of negotiations and the feedback
Mr. Clarke had received from the Man Board on the primary
open transaction terms.
Mr. Clarke told Mr. Ashken that Man was prepared to
offer $4.50 per share in cash in the merger and that this was
the most Man was willing to pay. Mr. Clarke also indicated
that such price was subject to Mans ability to reach an
agreement with each Individual Principal on the share exchange
agreement at the levels it anticipated. Mr. Clarke said
that Man was still negotiating with the Individual Principals.
Mr. Ashken said that this price was below what he was
hoping for and that ideally the price would be above GLGs
52-week
intra-day
high stock price of $4.61 per share. Mr. Clarke reported to
Mr. Ashken that there would be no movement in price.
Mr. Ashken noted that the special committee would discuss
the proposal and that any proposal would require the approval of
the special committee. Messrs. Ashken and Clarke also
discussed the potential use of a cap and floor on the
consideration to be received by the Selling Stockholders.
Mr. Ashken indicated that a cap on the consideration
received by the Selling Stockholders would be important in order
to protect the interests of the unaffiliated stockholders.
In the afternoon of May 14, the special committee held a
meeting by teleconference with representatives of Winston and
Moelis. The special committee discussed requesting that a cap on
the consideration received by the Selling Stockholders be
established (without a floor) to maintain the premium being
received by the unaffiliated stockholders compared to the
consideration to be paid to the Selling Stockholders. Moelis
also discussed with the special committee the offer price of
$4.50 in comparison to the current stock price of GLG, the
recent declines in the markets generally and other factors. The
special committee concluded that it would seek to obtain a price
of $4.61 per share (being the 52-week
intra-day
high price of GLG common stock).
The special committee then discussed the treatment of the GLG
warrants. Mr. Ashken reported that Man was considering
offering an undetermined nominal amount for the warrants because
there were some potential issues with having the warrants remain
outstanding after the merger (such as the potential of the
surviving corporation remaining subject to continued SEC
reporting obligations after the merger, the administrative
burdens and expense of administering the warrants that remain
outstanding, and the potential for nuisance claims from warrant
holders whose warrants would be permanently
out-of-the-money
after the merger), but had not made a final decision as to
whether they would do this. The special committee asked Moelis
to contact Perella Weinberg to determine Mans proposal for
treatment of the warrants. Moelis and Winston both reported on
their work in reviewing, analyzing and negotiating the
transaction agreements and other materials.
The special committee discussed severance and retention
arrangements for key personnel and agreed that any such
arrangements must not affect the price paid to the unaffiliated
stockholders. The special committee agreed that Mr. Ashken
would request final proposals from GLGs senior management
including the Individual Principals to ensure that the special
committee had sufficient time to evaluate such proposals prior
to considering any overall transaction.
Also on May 14, the Individual Principals and
Messrs. Jones, Waller, Aisbitt, Clarke, Hayes and Browne
and Ms. McKay, and representatives of Perella Weinberg and
Bank of America Merrill Lynch attended a rehearsal for the
investor meeting. Also on May 14, after prior
conversations, Mr. Clarke met with Messrs. Gottesman
and Roman and agreed to core retention and alignment
arrangements for the Individual Principals and Mr. Clarke
proposed that the Principals would receive an implied value of
$3.50 per share of GLG common stock in the proposed share
exchange transaction, subject to a cap but without a floor,
provided that the special committee accepted $4.50 per share of
GLG common stock as the price in the merger.
Messrs. Gottesman and Roman agreed to the proposal for
26
the Selling Stockholders to receive Man ordinary shares with a
value of $3.50 per share of GLG common stock in the share
exchange.
On May 14, Ms. Morland had a telephone call with
Mr. Rojek to discuss further GLGs proposal regarding
retention and severance arrangements for GLGs key
personnel other than the Individual Principals and to clarify
the calculation of the amounts payable under the arrangements.
Also on May 14, Clifford Chance circulated initial drafts
of the proposed employment agreements and service contracts
between affiliates of Man and each of the Individual Principals,
including non-competition agreements and share
lock-up
agreements. Weil circulated revised drafts of the merger
agreement, the share exchange agreement and the voting and
support agreement. Later that day, legal counsel for all the
parties had an all-hands lawyers teleconference to discuss
key open points in the transaction agreements. Subsequently,
Winston circulated the combined comments of Allen &
Overy, Winston and Chadbourne to the draft of the merger
agreement circulated by Weil earlier that day. Allen &
Overy circulated the combined comments of Allen &
Overy, Winston and Chadbourne to drafts of the share exchange
agreement and the voting and support agreement.
Later on May 14, Mr. Gottesman and Mr. Clarke had
a telephone call following the clarifications discussed between
management of Man and GLG, to discuss GLGs proposal
regarding retention and severance arrangements for GLGs
key personnel other than the Individual Principals and
Mr. Clarke did not object to the proposed arrangements.
On May 14, in advance of the special committee and
compensation committee meetings scheduled for May 16, 2010,
Chadbourne sent to Winston for circulation to the special
committee, materials summarizing the proposed retention and
severance arrangements for GLGs key personnel other than
the Individual Principals.
On May 15, 2010, after discussion about the retention and
severance arrangements for GLGs key personnel other than
the Individual Principals, Mr. Clarke confirmed to
Mr. Ashken that Man was still prepared to continue to
proceed with a transaction in which the unaffiliated
stockholders would receive $4.50 in cash per share of GLG common
stock, which Man had previously indicated was the maximum amount
it was prepared to pay.
On May 15 and 16, 2010, legal counsel for Man, GLG, the special
committee and the Principals had several teleconference calls to
continue negotiations on the merger agreement, the share
exchange agreement and the voting and support agreement.
In the morning of May 16, 2010, Messrs. Ashken and
Clarke had a telephone call in which Mr. Ashken asked
Mr. Clarke to raise Mans offer price for the
unaffiliated stockholders from $4.50 per share to $4.61 per
share. Mr. Clarke reiterated that $4.50 was the maximum Man
was willing to offer the unaffiliated stockholders and noted
that this was a premium of approximately 55% over GLGs
closing stock price on Friday, May 14, 2010. After
continued effort to elevate the price, Mr. Ashken finally
told Mr. Clarke that he would accept the $4.50 per share
cash proposal, subject to unanimous approval of the special
committee and the GLG Board, receipt by the special committee
and the GLG Board of fairness opinions from Moelis and Goldman
Sachs, respectively and satisfactory resolution of all open
contractual matters.
Also on May 16, Mr. Ashken requested that
Mr. Clarke agree to reduce the termination fee to 2.5% of
the total transaction value based on the special
committees sensitivity to the lack of a go-shop provision.
Later in the morning of May 16, the special committee held
a telephone meeting with representatives of Winston, Moelis,
Chadbourne and Messrs. San Miguel and Rojek.
Mr. Ashken reported on his call that day with
Mr. Clarke. Winston and Chadbourne reported on the status
of negotiations of the agreements. Mr. San Miguel
reported on the status of negotiation of the representations,
warranties and covenants to be made by GLG as part of the
transaction. Mr. San Miguel stated that treatment of
the warrants was still an outstanding issue that would be
addressed later in the day. Mr. San Miguel also
discussed his understanding of the status of employment
arrangements for the Individual Principals.
Mr. San Miguel stated that each Individual Principal
would be receiving the same level of compensation from Man as
they presently do from GLG, and also would be agreeing to
three-year non-competition agreements,
lock-ups of
Man ordinary shares received in the transaction and requirements
that they maintain personal investments in funds or accounts
managed by GLG of no less than a certain aggregate amount.
Representatives of Winston and Chadbourne provided a summary of
the terms of the proposed transaction with Man as negotiated to
date. The special committee discussed the principal economic
terms of the transaction.
27
Mr. San Miguel then explained GLGs approach to
retaining its key portfolio managers. Representatives of
Chadbourne made a presentation regarding proposed retention and
severance arrangements for GLG management other than the
Individual Principals. Messrs. San Miguel and Rojek
left the meeting and James Reda of James F. Reda &
Associates, LLC, independent compensation consultants retained
by GLG, joined the meeting. Mr. Reda presented his analysis
of the proposed compensation agreements for
Messrs. San Miguel, Rojek and Schreyer. Mr. Reda
said that in his opinion, the proposed arrangements with
Messrs. San Miguel, Rojek and Schreyer were reasonable
and within market practice. After Mr. Redas
presentation, the special committee and its advisors discussed
these issues, the directors restricted stock awards and
other employment arrangements. Then, Mr. Reda and
representatives of Chadbourne left the meeting.
Moelis representatives presented their financial analyses
regarding the fairness to the unaffiliated stockholders of the
consideration to be received in the merger by such stockholders,
and the special committee discussed the same. After discussion,
representatives of Moelis delivered to the special committee an
oral opinion, subsequently confirmed by delivery of a written
opinion dated May 16, 2010 that, as of May 16, 2010
and based upon and subject to the limitations and qualifications
set forth therein, the consideration of $4.50 per share in cash
to be received by the GLG stockholders (other than the Selling
Stockholders) in the merger was fair from a financial point of
view to such holders other than the Selling Stockholders. The
full text of the written opinion of Moelis dated May 16,
2010 is attached as Appendix D to this proxy statement. The
written opinion of Moelis sets forth, among other things, the
assumptions made, procedures followed, matters considered and
limitations on the reviews undertaken in connection with
rendering the opinion. See Opinion of the
Special Committees Financial Advisor.
The special committee then had a discussion with the Moelis
representatives regarding the value of Mans ordinary
shares. The special committee was concerned that there might be
intrinsic value in the Man ordinary shares that was not
reflected in their market price, or in any proposed economic
arrangements between Man Group and the Principals, that may
effectively increase the value of the consideration paid to the
Selling Stockholders. The Moelis representatives, at the request
of the special committee, had held discussions with
Mr. Hayes and representatives of Perella Weinberg and
reported back to the special committee that such discussions did
not reveal material economic value for Man that was not
reflected in publicly available information. The Moelis
representatives said that intrinsic value could arise at some
point in the future from AHL, Mans managed futures funds,
but noted that certain of those funds were presently below their
high water mark. At the request of the special committee,
representatives of Moelis submitted a supplemental written
presentation to the special committee regarding Man based on
such publicly available information.
The special committee then considered and discussed a number of
factors relating to the proposed transaction, which are
described in Fairness of the Merger and
Recommendations of the Special Committee and the GLG
Board The Special Committee.
The special committee then unanimously:
(1) determined that (i) it is in the best interests of
GLG and its unaffiliated stockholders for GLG to enter into the
merger agreement, and (ii) the transactions contemplated by
the merger agreement, including the merger, the share exchange
agreement and the voting and support agreement, are advisable
and fair to GLG and its unaffiliated stockholders;
(2) approved the waiver of the restrictions on transfer
applicable to shares of capital stock of GLG held by the Selling
Stockholders under the GLG Shareholders Agreement; and
(3) recommended that the GLG Board (i) determine it is
in the best interests of GLG and its stockholders for GLG to
enter into the merger agreement, (ii) authorize and approve
the execution, delivery and performance by GLG of the merger
agreement (subject to Minority Stockholder Approval),
(iii) waive the restrictions on transfer applicable to
shares of GLG capital stock held by the Selling Stockholders
under the GLG Shareholders Agreement, as requested by the
Selling Stockholders, (iv) approve the share exchange
agreement and the consummation of the transactions contemplated
thereby, (v) submit the adoption of the merger agreement to
a vote at a special meeting of GLG stockholders called for that
purpose, and (vi) recommend that stockholders of GLG vote
to adopt the merger agreement at the special meeting.
In the afternoon of May 16, a meeting of the GLG Board was
held by teleconference with all directors present. Messrs. San
Miguel and Rojek and representatives of Winston and Chadbourne
also attended the meeting.
28
Chadbourne representatives reviewed with the directors their
fiduciary duties. Representatives of Winston and Chadbourne
provided a summary of the terms of the transaction, including a
discussion of the covenants, conditions precedent and
termination fees (up to $48 million) and remaining
negotiating points. Representatives of Winston reported on the
special committee meeting that had taken place earlier that day
in which the special committee approved the transaction subject
to the caveat that the transaction be subject to Minority
Stockholder Approval.
The GLG Board discussed the issue of the GLG warrants, and
concluded they would like all outstanding issues relating to the
warrants to be resolved by the time of execution of the merger
agreement. The GLG Board had previously discussed and concurred
with the special committees determination that the
warrants had no economic value based on their contractual terms,
and the GLG Board was aware that Man had indicated it was
considering certain potential issues with having the warrants
remain outstanding after the merger. With the terms of the
merger and share exchange having been principally agreed, the
GLG Board asked Mr. Ashken to clarify with Man whether Man
had decided whether to pursue a tender offer for the warrants
and at what price. The GLG Board did not seek to negotiate a
price with Man directly because the warrants had no economic
value. Therefore, there was no credible basis to negotiate an
offer price for the warrants greater than that which Man may be
willing to offer.
Representatives of Goldman Sachs joined the meeting. Goldman
Sachs gave a financial presentation previously distributed to
members of the GLG Board describing, among other things, the
aggregate consideration of the transactions contemplated by the
share exchange agreement and merger agreement. Thereafter,
representatives of Goldman Sachs delivered its oral opinion,
which was subsequently confirmed in writing, to the GLG Board
that, as of May 17, 2010 and based upon and subject to the
assumptions made in its written opinion, the Aggregate
Consideration (as defined below) to be paid to the holders
(other than Man and its affiliates) of shares of GLG common
stock, FA Sub 2 exchangeable shares and convertible notes
pursuant to the share exchange agreement and merger agreement
was fair from a financial point of view to such holders. The
full text of the written opinion of Goldman Sachs dated
May 17, 2010 is attached as Appendix E to this proxy
statement. The written opinion of Goldman Sachs sets forth,
among other things, the assumptions made, procedures followed,
matters considered and limitations on the reviews undertaken in
connection with rendering the opinion. See
Opinion of GLGs Financial Advisor.
The GLG Board then considered and discussed a number of factors
relating to the proposed transaction, which are described in
Fairness of the Merger and Recommendations of
the Special Committee and the GLG Board The GLG
Board.
The GLG Board then unanimously:
(1) determined that the merger agreement and the
transactions contemplated thereby are advisable and fair to and
in the best interests of, GLG and its stockholders;
(2) authorized and approved the execution, delivery and
performance by GLG of the merger agreement (subject to the
Minority Stockholder Approval);
(3) approved the waiver of all the restrictions on transfer
applicable to shares of GLG capital stock held by the Selling
Stockholders under the GLG Shareholders Agreement, as requested
by the Selling Stockholders;
(4) approved the share exchange agreement and the
consummation of the transactions contemplated thereby;
(5) determined to submit the adoption of the merger
agreement to a vote at a special meeting of stockholders called
for that purpose; and
(6) recommended that stockholders of GLG vote to adopt the
merger agreement at the special meeting of stockholders.
Immediately following the GLG Board meeting, a GLG Compensation
Committee meeting was held at which the employment and severance
arrangements for key personnel presented earlier in the day to
the special committee were approved. See
Interests of Certain Persons in the
Merger Amendments to Certain Employment Agreements
with GLG.
Also on May 16, the Man Board committee comprised of
Messrs. Aisbitt and Clarke held a meeting to discuss the
terms of the transaction, the directors fiduciary duties
and the termination fee. The Man Board committee then approved
the transaction and confirmed the satisfaction of the
outstanding due diligence and other issues.
29
After the Man Board committee meeting, Man requested that GLG
agree to make a tender offer to purchase all outstanding GLG
warrants at a purchase price equal to the closing price of
GLGs publicly traded warrants on the last trading day
prior to the signing of the merger agreement ($0.129 per warrant
on May 14, 2010) at or prior to the merger of GLG and Man,
subject to completion of the merger. Man indicated it would
agree to ensure that at the effective time of the merger, GLG as
the surviving corporation, would have all funds necessary in
connection with the warrant tender offer and to reimburse GLG
for reasonable out-of-pocket costs incurred by GLG and its
subsidiaries in connection with the warrant tender offer and to
indemnify GLG and its subsidiaries from claims, losses and
damages suffered or incurred in connection with the tender
offer. GLG agreed to Mans request. GLG did not seek to
negotiate a price with Man because the warrants had no economic
value, and therefore there was no credible basis to negotiate an
offer price for the warrants greater than that Man was willing
to offer. The parties also agreed to reciprocal termination fees
of $48 million (subsequently reduced to $26 million)
payable in certain circumstances.
Early in the morning of May 17, 2010, all terms of the
transaction documents were finalized and the parties entered
into the merger agreement, the share exchange agreement and the
voting and support agreement. See The Merger
Agreement, Descriptions of Other Transaction
Agreements Share Exchange Agreement and
Descriptions of Other Transaction Agreements
Voting and Support Agreement.
Later on May 17, Man issued a press release announcing the
transaction and held a meeting for investors and a meeting for
analysts in which the Individual Principals participated. GLG
subsequently issued a press release announcing the transaction
and providing a brief summary of the terms of the transaction on
the same day.
On May 24, 2010, Ron Duva, a stockholder of GLG, filed a
putative class action complaint in the Court of Chancery of the
State of Delaware (the Delaware Court) on behalf of
himself and all other similarly situated stockholders of GLG,
captioned Duva v. GLG Partners, Inc., et al. (the
Delaware Action). The second amended complaint,
filed on July 8, 2010, alleges that the defendants in the
Delaware Action breached their fair price, fair process,
disclosure and other fiduciary duties to GLGs stockholders
in connection with the transactions contemplated by the Merger
Proposal
and/or aided
and abetted in such breaches of fiduciary duty. The Delaware
Action seeks, among other things, an injunction enjoining the
transactions contemplated in the Merger Proposal and to rescind
any transactions contemplated by the Merger Proposal that may be
consummated. On May 27, 2010, discovery commenced in the
Delaware Action. On June 29, 2010, the Delaware Court
entered an order certifying a plaintiff class of GLG
stockholders. On July 2, 2010, the Delaware Court entered a
scheduling order providing for a hearing on the plaintiffs
motion to enjoin consummation of the merger on September 3,
2010.
On May 24, 2010, Akoleo S.A., a purported stockholder of
GLG, filed a putative class action complaint in New York Supreme
Court (the New York Court) on behalf of itself and
all other similarly situated stockholders of GLG, captioned
Akoleo S.A. v. GLG Partners, Inc., et al. (the
Akoleo Action). On May 24, 2010, Tanweer Zia, a
purported stockholder of GLG, filed a putative class action
complaint in New York Court on behalf of himself and all other
similarly situated stockholders of GLG, captioned Zia v.
GLG Partners, Inc., et al. (the Zia Action and,
together with the Akoleo Action, the New York
Actions). The complaints filed in each of the New York
Actions alleges that the defendants in the New York Actions
breached their fair price, fair process, disclosure and other
fiduciary duties to GLGs stockholders in connection with
the transactions contemplated by the Merger Proposal. On
June 28, 2010, the defendants to the New York Actions moved
to dismiss, or, in the alternative, to stay, each of the New
York Actions. On July 7, 2010, the parties to the New York
Actions entered into, and the New York Court ordered, a
stipulation staying all proceedings in the New York Actions
pending resolution of the Delaware Action.
On August 19, 2010, Man, GLG and GLGs directors
(collectively, the Defendants), as defendants in the
Delaware Action, and the Defendants (other than Man), as
defendants in the New York Actions, reached an agreement in
principle with the plaintiffs in the Delaware Action and the New
York Actions providing for the settlement of the Delaware Action
and the New York Actions on the terms and subject to the
conditions set forth in the memorandum of understanding dated
August 19, 2010 (the MOU), which terms include,
but are not limited to, an obligation by GLG to make certain
additional disclosures in this proxy statement and an obligation
by Man, Merger Sub and GLG to amend the merger agreement to
(a) reduce each of the Company Termination Fee and the
Parent Termination Fee (each, as defined in the merger
agreement) from $48 million to $26 million;
(b) reduce the period following a termination of the merger
agreement under certain circumstances during which the Company
30
Termination Fee (as defined in the merger agreement) is payable
from within twelve (12) months to within nine
(9) months; and (c) reduce the period of time in which
Man may amend the terms of the merger agreement so that a
Superior Proposal (as defined in the merger agreement) is no
longer superior from three (3) business days to two
(2) business days; provided that solely for the purposes of
such two business day time period, a U.K. bank holiday will not
be deemed a business day. The settlement is subject to the
execution of definitive settlement documentation and the
approval of the Delaware Court. Upon effectiveness of the
settlement, all claims which were or could have been asserted in
the Delaware Action or the New York Actions will be fully and
completely discharged and dismissed with prejudice.
Also on August 19, Man, Merger Sub and GLG entered into an
amendment to the merger agreement (the Amendment) to
effectuate the amendments contemplated in the MOU described
above. Except as otherwise specifically amended in the
Amendment, the merger agreement, as modified by the Amendment,
remains in full force and effect. A copy of the Amendment is
attached as
Appendix A-1
to this proxy statement.
On June 21, 2010, Sage Summit LP entered into an
unconditional rescindable purchase agreement with Ogier
Fiduciary Services (Cayman) Limited, acting solely in its
capacity as trustee of the Blue Hill Trust, and Lavender Heights
Capital LP entered into an unconditional rescindable purchase
agreement with Ogier Fiduciary Services (Cayman) Limited, acting
solely in its capacity as trustee of the Green Hill Trust
(collectively, the Purchase Agreements). Under the
Purchase Agreements, Sage Summit LP and Lavender Heights
Capital LP (collectively, the LPs) each sold its
entire holding of 8,460,854 shares and
5,640,570 shares of GLG common stock, respectively, to the
Blue Hill Trust and the Green Hill Trust (collectively, the
Remainder Trusts), respectively, in exchange for a
deferred payment obligation, payable in installments on
specified dates of delivery of (A) (i) ordinary shares
of Man received by the Remainder Trusts in exchange for the GLG
shares under the share exchange agreement or (ii) in lieu
of all or a portion of the ordinary shares of Man described in
clause (i) above, an amount in cash equal to the net
proceeds from the sale of ordinary shares of Man not otherwise
being delivered pursuant to the terms of clause (i), in ordinary
sales transactions on the London Stock Exchange, together
with (B) an amount in cash equal to the cumulative value of
all dividends, distributions and other income distributed by Man
in respect of the notional number of ordinary shares of Man
delivered by the Remainder Trusts to the LPs; provided, however,
that the installment dates and share amounts set forth in the
Purchase Agreements may be adjusted to the extent that
forfeitures
and/or
reallocations of membership interests held by certain members of
the LPs occur after the date of the Purchase Agreements in
accordance with the terms of the LPs limited partnership
agreements, as applicable. The LPs each have the right to
rescind their respective Purchase Agreements with the respective
Remainder Trusts and reacquire the shares prior to completion of
the merger (or such other date as agreed). By virtue of the
Joinder Agreement dated as of June 21, 2010 by and among
Man, Merger Sub, GLG, the LPs and Ogier Fiduciary Services
(Cayman) Limited, in its capacity as trustee of each of the
Remainder Trusts, joined as a party to the share exchange
agreement and the voting and support agreement and agreed to
perform the obligations of the LPs thereunder. The Joinder
Agreement is attached as Appendix I to this proxy statement.
On September 1, 2010, Man announced that the Man
stockholder approval was obtained.
Fairness
of the Merger and Recommendations of the Special Committee and
the GLG Board
The
Special Committee
On April 29, 2010, the GLG Board formed a special committee
consisting solely of independent directors. The GLG Board
delegated to the special committee the authority, among other
things, to:
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establish, approve, modify, monitor and direct the process,
procedures and activities relating to the review, evaluation and
negotiation of one or more proposals made to GLG by Man for a
potential transaction and any alternative transaction;
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review, consider, evaluate, respond to, negotiate, reject,
recommend or approve on behalf of GLG or the GLG Board (except
as otherwise required by law) a potential transaction with Man
or an alternative transaction;
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if it determines that continuing GLGs business without
engaging in a potential transaction with Man or an alternative
transaction is in the best interest of GLG, reject any such
potential transaction with Man or an alternative transaction;
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determine whether any such potential transaction with Man or an
alternative transaction is advisable and is fair to, and in the
best interests of, GLG and its stockholders (other than the
Selling Stockholders); and
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recommend to the board of directors what action, if any, should
be taken in connection with any such potential transaction with
Man or an alternative transaction.
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On May 16, 2010, the special committee, after discussion
and consideration of the terms of the merger agreement, the
share exchange agreement and the voting and support agreement,
and in each case the transactions contemplated thereby, and
following the receipt of a presentation from Moelis, and
Moeliss oral opinion subsequently confirmed by delivery of
a written opinion dated May 16, 2010 that, as of
May 16, 2010 and based upon and subject to the limitations
and qualifications set forth therein, the consideration of $4.50
per share in cash to be received by the GLG stockholders (other
than the Selling Stockholders) in the merger was fair from a
financial point of view to such holders other than the Selling
Stockholders, unanimously:
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determined that (i) it is in the best interests of GLG and
its stockholders for GLG to enter into the merger agreement, and
(ii) the transactions contemplated by the merger agreement,
including the merger, the share exchange agreement and the
voting and support agreement are advisable and fair to GLG and
its unaffiliated stockholders;
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approved the waiver of the restrictions on transfer applicable
to shares of capital stock of GLG held by the Selling
Stockholders under the GLG Shareholders Agreement; and
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recommended that the GLG Board (i) determine it is in the
best interests of GLG and its stockholders for GLG to enter into
the merger agreement, (ii) authorize and approve the
execution, delivery and performance by GLG of the merger
agreement (subject to the Minority Stockholder Approval),
(iii) waive the restrictions on transfer applicable to
shares of GLG capital stock held by the Selling Stockholders
under the GLG Shareholders Agreement, as requested by the
Selling Stockholders, (iv) approve the share exchange
agreement and the consummation of the transactions contemplated
thereby, (v) submit the adoption of the merger agreement to
a vote at a special meeting of GLG stockholders called for that
purpose, and (vi) recommend that stockholders of GLG vote
to adopt the merger agreement at the special meeting.
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In the course of reaching the determination and making the
recommendations described above, the special committee
considered and discussed a number of factors as generally
positive or favorable, including, but not limited to, the
following:
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the current and prospective conditions in the alternative
investment industry and the potential challenges that GLG faces
in attracting assets under management and maintaining or growing
management and performance fee revenues;
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the possible alternatives to a sale, including maintaining GLG
as an independent public company, conducting a stock repurchase
or undertaking a recapitalization, and the potential risks,
rewards and uncertainties associated with those alternatives,
including:
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the risks associated with remaining an independent company
arising from a decline in assets under management and related
management and performance fee revenue;
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the risks associated with the need to refinance GLGs
outstanding indebtedness under its credit facility and
convertible notes beginning as early as May 2011; and
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the need to pay GLGs investment professionals a
significant amount, including in the form of additional shares,
in order to retain these professionals, which could result in
additional dilution to GLGs stockholders;
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the process for maximizing stockholder value in a sale of GLG,
including:
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the special committees assessment, after consultation with
its financial advisor, of the relative likelihood that other
potential acquirors would submit competitive proposals absent a
pending transaction, given the
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limited number of potential acquirors in the industry with the
financial resources required to consummate an acquisition of GLG;
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the potential harm to GLGs business of conducting a public
auction;
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the potential competitive harm to GLGs business of
providing potential bidders access to GLGs confidential
due diligence materials;
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the potential harm to GLGs business of engaging with a
bidder that did not present a significant likelihood of
achieving a successful transaction;
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the risk of loss of opportunity to enter into a transaction with
Man; and
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the lack of assurance that there would be another opportunity
for GLG stockholders (other than the Selling Stockholders) to
receive as significant a premium as that contemplated by the
proposed merger;
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the current and historical market prices for the shares of GLG
in comparison to the offer price of $4.50 per share, including
that the one-year average trading price of GLG stock was $3.40
and that GLG stock had traded as low as $2.58 and as high as
$4.61 in the past year, and that the merger would provide GLG
stockholders (other than the Selling Stockholders) with an
opportunity to receive an immediate cash payment for their
shares at a price that represents a premium of approximately 55%
over the closing price of $2.91 per share on May 14, 2010,
the last trading day prior to the public announcement of the
proposed merger, providing them with immediate liquidity without
the risks related to GLGs current business plan, which
could take an extended period of time to achieve positive
returns;
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the current market price for Man ordinary shares and that the
per share consideration in the merger represents a premium of $1
as of the date the proposed merger was publicly announced, over
the value of the per share consideration in the share exchange,
which premium may not be reduced to less than $0.25 per share on
the closing date;
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based on a range of estimates of the potential synergies
available with the combination of the two businesses, a
determination that the merger consideration included an
appropriate share of the total synergies value resulting from
the merger;
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the certainty of immediate cash that the merger would provide to
the GLG stockholders (other than the Selling Stockholders),
without incurring brokerage costs or other costs typically
associated with market sales, as well as the flexibility to
invest that cash in other assets, including in Man ordinary
shares;
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that as a result of the merger, GLG stockholders would no longer
be subject to the market, economic and other risks which arise
from owning an interest in a public company;
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that GLG is dependent on the continued services of the
Individual Principals and key personnel who, in addition to
voting their GLG shares against a proposed alternative
transaction, could preclude an alternative takeover by
discontinuing their services with GLG;
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the desire and willingness of the Selling Stockholders to sell
their shares at this time and enter into the share exchange with
Man, without which the merger transaction with Man would not
have been possible because Man was unwilling to offer GLG
stockholders (other than the Selling Stockholders) merger
consideration in the form of Man ordinary shares as doing so
would require Man to register its shares in the U.S., become
subject to reporting requirements under U.S.
federal securities laws and consequently to incur
significant costs and administrative effort required to comply
with both the U.K. and U.S. regulatory regimes, and
Mans desire to offer the Selling Stockholders
consideration in the form of Man ordinary shares to align the
interests of the Selling Stockholders with Mans
shareholders;
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the substantial market overhang of shares held by
the Selling Stockholders and the significant number of other
shares held by stockholders, employees and key personnel subject
to transfer restrictions under the GLG Shareholders Agreement
and other restricted stock agreements that would be free of such
restrictions within the next 12 to 18 months;
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that the Principals would be prohibited from selling any of the
Man ordinary shares they receive as merger consideration for two
years, and could sell only one-third of such shares in the third
year following the consummation of the merger;
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presentations by and discussions with senior management of GLG,
the Individual Principals, Man and the special committees
legal and financial advisors regarding the principal terms of
the merger agreement, the share exchange agreement and other
ancillary documents;
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the oral opinion of Moelis delivered to the special committee,
subsequently confirmed by delivery of a written opinion dated
May 16, 2010, that, as of May 16, 2010 and based upon
and subject to the limitations and qualifications set forth
therein, the consideration of $4.50 per share in cash to be
received by GLG stockholders (other than the Selling
Stockholders) in the merger was fair from a financial point of
view to such holders other than the Selling Stockholders, which
opinion is attached as Appendix D to this proxy statement,
and the presentation by, and the discussions with
representatives of Moelis as to matters relevant to such
opinion, as described under Background of the
Merger above, with the understanding that Moelis was
entitled to receive a fee upon delivery of its opinion and that,
upon the closing of the transaction, Moelis will become entitled
to a transaction fee in consideration of providing financial
advice to the special committee;
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the opinion of Goldman Sachs International delivered to the
board that, as of May 17, 2010 and based upon and subject
to the factors and assumptions set forth therein, the Aggregate
Consideration (defined below) to be paid to the holders (other
than Man and its affiliates) of shares of GLG common stock, FA
Sub 2 exchangeable shares and convertible notes pursuant to the
share exchange agreement and merger agreement was fair from a
financial point of view to such holders, which opinion is
attached as Appendix E to this proxy statement, and the
presentation by, and the discussions with representatives of
Goldman Sachs as to matters relevant to such opinion, as
described under Background of the Merger
above, with the understanding that Goldman Sachs was entitled to
receive a fee upon announcement of the execution of the share
exchange agreement and the merger agreement and that, upon the
closing of the transaction, Goldman Sachs will become entitled
to a transaction fee in consideration of providing financial
advice to the board;
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the absence of any alternative acquisition proposals, in
particular, during the period between March 26, 2010, when
a number of press articles appeared regarding a potential
acquisition by Man of certain U.S. alternative asset
managers, including GLG, and May 17, 2010, the date the
proposed merger was publicly announced;
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that GLG did not enter into any exclusivity arrangements with
Man, Holdco and Merger Sub prior to the execution and delivery
of the merger agreement;
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that the merger and the share exchange are not expected to close
for several months which would provide an adequate opportunity
for alternative proposals to be made, associated due diligence
to be conducted and definitive documentation to be negotiated
with respect thereto, and for the board to consider such
alternative proposals and agreements, if any;
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the business reputation, financial resources and historical
success of Man in structuring and completing complex
transactions;
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the terms and conditions of the merger agreement, including:
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GLGs ability, under certain circumstances, to provide
information to,
and/or
participate in discussions or negotiations with, third parties
regarding alternative takeover proposals;
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the ability of the GLG Board or the special committee, under
certain circumstances, to change its recommendation that the GLG
stockholders vote in favor of adoption and approval of the
merger agreement; and
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GLGs ability, under certain circumstances, to terminate
the merger agreement in order to enter into a definitive
agreement related to a superior proposal, subject to paying a
termination fee of $48 million (equal to approximately 3%
of the equity value of the combined merger and share exchange
transactions), which was subsequently reduced to
$26 million;
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that there are breakup fees and expense coverage payable by both
GLG and Man in certain circumstances;
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the merger is not subject to a financing condition, which
reduces the execution risk attached to the completion of the
merger and thus makes it more likely that the merger will be
consummated promptly upon satisfaction of the conditions to the
completion of the merger as described in this proxy statement;
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the availability of appraisal rights to GLG stockholders who
comply with all of the required procedures under Delaware law
for exercising appraisal rights, which allow such stockholders
to seek appraisal of the fair value of their stock as determined
by the Court of Chancery of the State of Delaware; and
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the likelihood of receiving the regulatory approvals required to
consummate the merger.
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In the course of reaching the determinations and making the
recommendations described above, the special committee
considered a number of factors to be generally negative or
unfavorable, including, but not limited to, the following:
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that the GLG stockholders, other than the Selling Stockholders,
will have no ongoing equity participation in us following the
merger, and that the GLG stockholders will cease to participate
in our future earnings or growth, if any, or to benefit from
increases, if any, in the value of our common stock, and will
not participate in any potential future sale of GLG to a third
party or any potential recapitalization of GLG which could
include a dividend to stockholders;
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that the Selling Stockholders could realize significant returns
on their equity investment in Man following the merger;
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the Selling Stockholders participation in the merger and
the share exchange and that they have interests in the
transactions that differ from, or are in addition to, those of
GLG stockholders unaffiliated with the Selling Stockholders;
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the risks and costs to GLG if the merger does not close,
including paying the fees and expenses associated with the
transaction in certain circumstances, the diversion of
management and employee attention, potential employee attrition
and the potential effect on business and customer relationships;
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that the merger consideration will generally be taxable for
U.S. federal income tax purposes to GLG stockholders who
surrender shares of our common stock in the merger;
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that the special committee did not solicit competing bids for us
from other potentially interested third parties prior to signing
the merger agreement with Man and Merger Sub, although the
special committee was satisfied that the merger agreement
provided GLG with the ability to consider and pursue certain
alternative takeover proposals;
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the risk that the merger and the share exchange might not be
completed in a timely manner or at all;
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the ability of the Selling Stockholders holding beneficial
ownership of approximately 48.8% of our voting stock to
potentially preclude an alternative takeover proposal and the
impact that could have on the interest of third parties in
making offers competitive with Mans offer;
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that the merger agreement contains restrictions on the conduct
of GLGs business prior to the completion of the merger,
generally requiring GLG to conduct our business only in the
ordinary course, subject to specific limitations, which may
delay or prevent GLG from undertaking business opportunities
that may arise pending completion of the merger and the length
of time between signing and closing when these restrictions are
in place; and
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the provisions in the merger agreement that require us to
reimburse Mans expenses up to $15 million if
(1) the merger agreement is terminated by us or Man because
our stockholders fail to approve and adopt the merger agreement
at the special meeting (except in certain circumstances) or (2)
the merger agreement is terminated by Man as a result of our
breach of our agreement to hold the special meeting, to prepare
the related proxy statement, to refrain from soliciting
alternative takeover proposals or to make and not change our
boards recommendation for the merger (except in certain
circumstances).
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In the course of reaching the determinations and decisions, and
making the recommendations, described above, the special
committee considered the following factors relating to the
procedural safeguards that the special committee believes were
present to ensure the fairness of the merger and to permit the
special committee to represent the interests of the GLG
stockholders (other than the Selling Stockholder), each of which
the special committee believes supports its decision and
provides assurance of the fairness of the merger to us and such
stockholders:
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the merger is subject to the nonwaivable condition of the
adoption of the merger agreement by GLG stockholders, including
the adoption of the merger agreement by the holders of a
majority of the then outstanding shares of our common stock,
other than shares owned by the Selling Stockholders, GLG, Man
and its affiliates (including Holdco and Merger Sub), GLG and
its affiliates (excluding directors serving on the special
committee) and GLG employees;
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that the special committee consists solely of independent,
non-employee directors;
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that the special committee members will be adequately
compensated for their services, the amount of which was
established before they commenced their consideration of
strategic alternatives, and that their compensation for serving
on the special committee was in no way contingent on their
approving the merger agreement and taking the other actions
described in the proxy statement;
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that the special committee retained and was advised by
Winston & Strawn LLP and Abrams & Bayliss LLP
(Delaware counsel) as its independent legal counsel and Moelis
as its independent financial advisor;
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that the special committee received from its financial advisor,
Moelis, an opinion delivered orally at the special committee
meeting on May 16, 2010, and subsequently confirmed by
delivery of a written opinion dated May 16, 2010 that, as
of May 16, 2010 and based upon and subject to the
limitations and qualifications set forth therein, the
consideration of $4.50 per share in cash to be received by the
GLG stockholders (other than the Selling Stockholders) in the
merger was fair from a financial point of view to such holders
(other than the Selling Stockholders);
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that the special committee was provided with full access to our
management and documentation in connection with the due
diligence conducted by its advisors;
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that the special committee, with the assistance of its legal and
financial advisors, negotiated extensively with Man and its
representatives;
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that the special committee had ultimate authority to decide
whether to proceed with a transaction or any alternative
transaction;
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that the special committee was authorized to consider all
strategic alternatives with respect to GLG to enhance
stockholder value, including the sale of GLG;
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that the special committee was aware that it had no obligation
to recommend any transaction and had the authority to reject any
transaction on behalf of the GLG stockholders (other than the
Selling Stockholders);
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that the special committee had the authority, through the
delegation of the GLG Boards powers, to waive the
restrictions on transfer applicable to shares of GLG common
stock held by the Selling Stockholders under the GLG
Shareholders Agreement; and
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that the special committee made its evaluation of the merger
agreement and the merger based upon the factors discussed in
this proxy statement, independent of the other members of our
board of directors, including the Individual Principals, and
with knowledge of the interests of the Individual Principals in
the merger.
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In evaluating whether to pursue a transaction with Man or any
strategic alternatives, including continuing to execute
GLGs business plan as a standalone company, the special
committee considered the fact that under the Voting Agreement
entered into in 2007 (as described under Important
Information Regarding the Principals Voting
Agreement), the Selling Stockholders and their affiliates
are able to determine the outcome of most matters requiring
stockholder approval (other than those requiring a
super-majority vote and other than matters for which they agreed
that the unaffiliated stockholders may have a separate vote)
and, as a result, without some form of minority voting
protection, the Selling Stockholders could cause or prevent a
change of control of GLG, possibly depriving the unaffiliated
stockholders of an
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opportunity to receive a premium for their shares as part of a
sale of GLG. The special committee further considered the fact
that the GLG board of directors had delegated to the special
committee broad powers to review, negotiate and recommend or
reject a possible transaction with Man or any alternative
transaction, which, taken together with a separate
majority-of-the-minority voting requirement, would, in the
special committees judgment, remove to the greatest extent
possible the Selling Stockholders potentially conflicted
influence and control over a potential transaction with Man.
In evaluating Mans demand for a voting and support
agreement of the type ultimately negotiated with the Selling
Stockholders, the special committee considered the protective
effects of the delegation of board authority and the minority
voting requirement described above, together with the fact that:
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similar voting agreements are reasonably customary in public
company change of control transactions that involve significant
share ownership blocks;
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Man was unwilling to enter into a transaction that did not
involve a voting agreement with the Selling Stockholders;
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the proposed voting and share exchange agreements would
terminate upon the termination of the proposed merger agreement,
thereby protecting to the greatest extent possible the ability
of the special committee to terminate the merger agreement in
connection with a change in its recommendation to GLG
stockholders, as described under The Merger
Agreement Restrictions on Change of Recommendation
to Stockholders; and
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the proposed voting agreement would prevent the occurrence of a
scenario in which the Selling Stockholders voted against the
adoption of the merger agreement while a majority of the
unaffiliated stockholders voted in favor of the adoption of the
merger agreement.
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In analyzing the merger relative to our going concern value, the
special committee adopted the analysis and the opinion of
Moelis. The special committee did not consider liquidation value
as a factor because GLG is a viable going concern business and
the trading history of GLG common stock is an indication of its
value as such. In addition, due to the fact that GLG is being
sold as a going concern and that its most valuable assets are
its investment professionals, the special committee did not
consider GLGs liquidation value relevant in its
deliberations. Further, the special committee did not consider
net book value a material indicator of GLGs value because
such a valuation metric is generally not meaningful for asset
management firms, which are typically valued based on assets
under management and future earnings potential. The net book
value of GLG is merely indicative of historical costs and as of
March 31, 2010 represented a negative value.
The foregoing discussion of information and factors considered
and given weight by the special committee is not intended to be
exhaustive, but is believed to include substantially all of the
material factors, both positive and negative, considered by the
special committee. In view of the variety of factors considered
in connection with its evaluation of the merger agreement and
the merger, the special committee did not find it practicable
to, and did not, quantify or otherwise assign relative weights
to the specific factors considered in reaching its determination
and recommendation. In addition, individual special committee
members may have given different weights to factors. The special
committees recommendations were based upon the totality of
the information presented to and considered by it. The special
committee conducted extensive discussions of, among other
things, the factors described above, including asking questions
of our management and the special committees financial and
legal advisors.
The
GLG Board
On May 16, 2010, the GLG Board, after receiving the oral
opinion of its financial advisor Goldman Sachs, which was
subsequently confirmed in writing, that, as of May 17, 2010
and based upon and subject to the factors and assumptions set
forth therein, the Aggregate Consideration (defined below) to be
paid to the holders (other than Man and its affiliates) of
shares of GLG common stock, FA Sub 2 exchangeable shares and our
5.00% dollar-denominated convertible subordinated notes
convertible into shares of our common stock (the
convertible notes),
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pursuant to the share exchange agreement and merger agreement
was fair from a financial point of view to such holders, and
acting upon the unanimous recommendation of the special
committee, unanimously:
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determined that the merger agreement and the transactions
contemplated thereby are advisable and procedurally and
substantively fair to and in the best interests of, GLG and its
stockholders (including its unaffiliated stockholders);
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authorized and approved the execution, delivery and performance
by GLG of the merger agreement (subject to the Minority
Stockholder Approval);
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approved the waiver of all the restrictions on transfer
applicable to shares of GLG capital stock held by the Selling
Stockholders under the GLG Shareholders Agreement, as requested
by the Selling Stockholders;
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approved the share exchange agreement and the consummation of
the transactions contemplated thereby;
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determined to submit the adoption of the merger agreement to a
vote at a special meeting of stockholders called for that
purpose; and
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recommended that stockholders of GLG vote to adopt the merger
agreement at the special meeting of stockholders.
|
In the course of reaching the determination and making the
recommendations described above, the GLG Board considered and
discussed and adopted the following material factors:
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the unanimous determinations and recommendations of the special
committee;
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the factors considered by the special committee, including the
generally positive and favorable factors, as well as the
generally negative and unfavorable factors, and the factors
relating to procedural safeguards described above; and
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the fairness opinion of Goldman Sachs described under
Special Factors Opinion of GLGs
Financial Advisor above.
|
Opinion
of Special Committees Financial Advisor
On May 16, 2010, at a meeting of the special committee held
to evaluate the transaction, Moelis delivered to the special
committee an oral opinion, subsequently confirmed by delivery of
a written opinion dated May 16, 2010 to the effect that,
based upon and subject to the limitations and qualifications set
forth in the written opinion, as of the date of the opinion the
consideration of $4.50 per share in cash to be received by the
stockholders of GLG (other than the Selling Stockholders) in the
merger was fair from a financial point of view to such
stockholders.
The full text of the Moelis opinion describes the assumptions
made, procedures followed, matters considered and limitations on
the review undertaken by Moelis. The opinion is attached as
Appendix D to this proxy statement and is incorporated into
this proxy statement by reference. GLGs stockholders are
encouraged to read this opinion carefully in its entirety.
Moeliss opinion does not address GLGs underlying
business decision to effect the merger or the relative merits of
the merger as compared to any alternative business strategies or
transactions that might be available to GLG and does not
constitute a recommendation to any stockholder of GLG as to how
such stockholder should vote with respect to the merger or any
other matter.
At the direction of the special committee, Moelis was not asked
to, nor did it, offer any opinion as to (i) the material
terms of the merger agreement or the form of the merger or any
other contractual arrangement that the parties may enter into in
connection with the merger or (ii) the fairness of the
merger to, or any consideration that may be received in
connection therewith by, the Selling Stockholders, nor did
Moelis offer any opinion as to the relative fairness of the
consideration of $4.50 per share in cash to be received by the
stockholders of GLG (other than the Selling Stockholders) in the
merger and the consideration to be received by the Selling
Stockholders in the share exchange. Moelis also assumed, with
consent of the special committee, that the representations and
warranties of all parties to the merger agreement are true and
correct, that each party to the merger agreement will perform
all of the covenants and agreements required to be performed by
such party, that all conditions to the consummation of
38
the merger will be satisfied without waiver thereof, and that
the merger will be consummated in a timely manner in accordance
with the terms described in the merger agreement, without any
modifications or amendments thereto or any adjustment to the
merger consideration of $4.50 per share in cash to be received
by the stockholders of GLG (other than the Selling
Stockholders). In rendering its opinion, Moelis also assumed,
with the special committees consent, that the final
executed form of the merger agreement does not differ in any
material respect from the draft that Moelis examined. Moelis was
not authorized to and did not solicit indications of interest in
a possible transaction with GLG from any party.
Moelis, in arriving at its opinion, among other things:
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reviewed certain publicly available business and financial
information relating to GLG, including estimates of certain Wall
Street analysts with respect to GLG for 2010 and 2011, and Man;
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reviewed certain internal information relating to the business,
earnings, cash flow, assets, liabilities and prospects of GLG
furnished to Moelis by GLG;
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conducted discussions with members of senior management and
representatives of GLG and Man concerning the matters described
in the first two bullet points above, as well as the business
and prospects of GLG and Man generally;
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reviewed publicly available financial and stock market data,
including valuation multiples, for GLG and compared them with
those of certain other companies in lines of business that
Moelis deemed relevant;
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compared the proposed financial terms of the merger with the
financial terms of certain other transactions that Moelis deemed
relevant;
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reviewed a draft of the merger agreement dated May 16, 2010;
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participated in certain discussions and negotiations among
representatives of GLG and Man and their financial and legal
advisors; and
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conducted such other financial studies and analyses and took
into account such other information as Moelis deemed appropriate.
|
In connection with its review, Moelis did not assume any
responsibility for independent verification of any of the
financial, legal, regulatory, tax, accounting and other
information supplied to, discussed with, or reviewed by Moelis
for the purpose of its opinion and, with the special
committees consent, relied on such information being
complete and accurate in all material respects. In addition, at
the special committees direction, Moelis did not make any
independent evaluation or appraisal of any of the assets or
liabilities (contingent, derivative, off-balance-sheet, or
otherwise) of GLG, nor was Moelis furnished with any such
evaluation or appraisal. For the purposes of its analysis and
opinion, Moelis was directed by the special committee to use the
average of the Wall Street analysts estimates referred to
above with certain additional assumptions provided by management
of GLG.
Moeliss opinion was necessarily based on economic,
monetary, market and other conditions as in effect on, and the
information made available to Moelis as of, the date of the
opinion.
In addition, the special committee did not ask Moelis to
address, and Moeliss opinion did not address, the fairness
to, or any other consideration of, the holders of any class of
securities, creditors or other constituencies of GLG, other than
the holders of GLG common stock that are not Selling
Stockholders. Moelis also did not express any opinion as to the
fairness of the amount or nature of any compensation to be
received by any of GLGs officers, directors or employees,
or any class of such persons, relative to the merger
consideration of $4.50 per share in cash to be received by
GLGs stockholders (other than the Selling Stockholders) in
the merger or otherwise.
Moelis provided its opinion for the use and benefit of the
special committee in its evaluation of the transaction. The
Moelis opinion was approved by a Moelis fairness opinion
committee.
Financial
Analyses
The following is a summary of the material financial analyses
presented by Moelis to the special committee on May 16,
2010, in connection with the delivery of the opinion described
above.
39
The summary set forth below does not purport to be a complete
description of the analyses performed and factors considered by
Moelis in arriving at its opinion, nor is the order of analyses
described below meant to indicate the relative weight or
importance given to those analyses by Moelis. The preparation of
a fairness opinion is a complex process involving various
determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to
the particular circumstances; therefore, such an opinion is not
readily susceptible to partial analysis or summary description.
With respect to the comparable public companies analysis and the
precedent transactions analysis summarized below, no company,
business or transaction used in such analyses as a comparison is
either identical or directly comparable to GLG, GLGs
businesses or the proposed transaction, nor is an evaluation of
such analyses entirely mathematical. These analyses necessarily
involve complex considerations and judgments concerning
financial and operating characteristics and other factors. In
arriving at its opinion, Moelis did not attribute any particular
weight to any analysis or factor considered by it, but rather
made qualitative judgments as to the significance and relevance
of each analysis and factor. Accordingly, Moelis believes that
its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it,
without considering all factors and analyses, would, in the view
of Moelis, create an incomplete and misleading view of the
analyses underlying Moeliss opinion.
Some of the summaries of financial analyses below include
information presented in tabular format. In order to understand
fully Moeliss analyses, the tables must be read together
with the text of each summary. The tables alone do not
constitute a complete description of the analyses performed by
Moelis. Considering the data described below without considering
the full narrative description of the financial analyses,
including the methodologies and assumptions underlying the
analyses, could create a misleading or incomplete view of
Moeliss analyses.
The analyses performed by Moelis include analyses based upon
forecasts of future results, which results might be
significantly more or less favorable than those upon which
Moeliss analyses were based. The analyses do not purport
to be appraisals or to reflect the prices at which GLGs or
Mans shares might trade at any time following the
announcement of the transaction. Because the analyses are
inherently subject to uncertainty, being based upon numerous
factors and events, including, without limitation, factors
relating to general economic and competitive conditions beyond
the control of the parties or their respective advisors, neither
Moelis nor any other person assumes responsibility if future
results or actual values are materially different from those
contemplated below.
Comparable
Public Companies Analysis
Moelis analyzed the market values and trading multiples of GLG
and generally comparable publicly traded alternative asset
management companies and traditional asset management companies.
Using publicly available information, Moelis selected and
analyzed the market values and trading multiples of GLG and the
corresponding trading multiples for the North American and
European publicly traded alternative and traditional asset
management companies listed below:
Alternative
Asset Management Companies
North American
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The Blackstone Group L.P.
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Fortress Investment Group LLC
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Och-Ziff Capital Management Group LLC
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European
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3i Group PLC
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Ashmore Group PLC
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BlueBay Asset Management plc
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Charlemagne Capital Limited
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Gottex Fund Management Holdings Limited
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Kohlberg Kravis Roberts & Co.
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40
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Man
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Partners Group AG
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Polar Capital Holdings PLC
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Traditional
Asset Management Companies
North American
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Affiliated Managers Group, Inc.
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AllianceBernstein Holding L.P.
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Artio Global Investors Inc.
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BlackRock, Inc.
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Cohen & Steers, Inc.
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Eaton Vance Corp.
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Federated Investors, Inc.
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Franklin Resources, Inc.
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GAMCO Investors, Inc.
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Invesco Ltd.
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Janus Capital Group Inc.
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Legg Mason, Inc.
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Pzena Investment Management, Inc.
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Sprott Inc.
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T. Rowe Price Group, Inc.
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Waddell & Reed Financial, Inc.
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European
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Aberdeen Asset Management PLC
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F&C Asset Management PLC
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Gartmore Investment Ltd.
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Henderson Group PLC
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Liontrust Asset Management PLC
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Schroders PLC
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Moelis calculated the range of trading multiples for all of the
selected companies listed above, as well as just for Och-Ziff
Capital, Fortress Investment Group, Ashmore Group, BlueBay and
Man, or the peer group companies, which it considered the most
directly comparable publicly traded companies to GLG relative to
the other companies selected for the analysis. All multiples
were based on the closing stock prices of the selected companies
on May 14, 2010. Moelis reviewed enterprise values of the
selected companies as multiples of, among other things,
estimated calendar year 2010 and estimated calendar year 2011
earnings before interest, taxes, depreciation and amortization,
or EBITDA. Moelis calculated enterprise value as the market
capitalization (or equity value), plus total debt and minority
interests and preferred stock, less cash and cash equivalents.
Moelis also reviewed price to earnings multiples, or P/E, which
is the per share equity value of the selected companies as a
multiple of earnings per share, or EPS.
41
Estimated financial data for the selected companies were based
on publicly available Wall Street research analysts
estimates. At the direction of GLGs management, estimated
financial data for GLG was based on the average of Wall Street
research analysts estimates and in the case of GLGs
estimated EPS, also included certain interest and tax
assumptions as per GLGs management.
The following table summarizes the range of trading multiples
for all selected companies and the range of trading multiples
for the peer group companies:
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Alternative Asset
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Traditional Asset
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Management
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Management
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Peer Group
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Companies
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Companies
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Companies
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Enterprise Value/2010E EBITDA
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4.1x 13.5x
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3.4x 13.1x
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4.1x 11.0x
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Enterprise Value/2011E EBITDA
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1.3x 11.4x
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2.9x 11.3x
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4.4x 9.4x
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2010E P/E
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5.9x 19.7x
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7.5x 25.6x
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9.4x 14.6x
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2011E P/E
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6.4x 15.6x
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6.2x 37.0x
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6.9x 13.0x
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Based upon the foregoing and qualitative judgments related
primarily to differing fund types and investment strategies,
growth prospects, profitability margins and relative recent
operating performance, Moelis selected multiple ranges for each
metric, applied the selected ranges to the relevant statistic
for GLG and calculated an implied range of GLG stock prices as
compared to the merger consideration of $4.50 per share in cash
to be received by GLGs stockholders (other than the
Selling Stockholders). The following table presents the results
of such analysis, assuming a $4.50 per share cash consideration
for all shares of GLG common stock in the merger and the share
exchange:
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GLG
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Implied Price per GLG Share
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Enterprise Value/2010E EBITDA
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8.0x 11.0x
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$
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1.56 $2.26
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Enterprise Value/2011E EBITDA
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8.0x 10.0x
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$
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3.06 $3.96
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2010E P/E
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11.0x 15.0x
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$
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2.12 $2.89
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2011E P /E
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9.0x 13.0x
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$
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2.69 $3.88
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Moelis noted that, in each case, the merger consideration of
$4.50 per share in cash to be received by GLGs
stockholders (other than the Selling Stockholders) was above
such range.
Precedent
Transaction Analysis
Moelis reviewed the financial terms of 22 precedent merger and
acquisition transactions involving alternative asset management
companies and 18 precedent merger and acquisition transactions
involving traditional asset management companies announced since
November 2007. Moelis selected the transactions based on a
number of criteria, including the nature of the target
companies business and assets under management, or AUM.
Moelis noted that the majority of precedent transactions
reviewed occurred under significantly different credit and
market conditions than those prevailing as of May 14, 2010,
the last trading day prior to the delivery of Moeliss
opinion. For purposes of certain of the analyses described below
Moelis selected eight of these transactions, two involving
alternative asset management companies and six involving
traditional asset management companies, because they were the
only precedent transactions that had publicly disclosed EBITDA
for the
12-month
period prior to announcement of the transaction, or LTM EBITDA.
The following table sets forth a list of all precedent
transactions reviewed (the eight selected precedent transactions
are identified in bold):
Precedent
Transactions
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Announcement Date
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Acquiror
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Target
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Alternative Asset Management Companies
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March 30, 2010
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Investec plc
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Rensburg Sheppards plc
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February 10, 2010
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Affiliated Managers Group Inc.
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Pantheon Ventures Inc.
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42
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Announcement Date
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Acquiror
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Target
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February 1, 2010
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Affiliated Managers Group Inc.
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Artemis Investment Management Ltd.
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January 8, 2010
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Aberdeen Asset Management PLC
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Investment Strategies division of RBS Asset Management
Limited
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October 9, 2009
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Occidental Petroleum Corp.
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Phibro LLC
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June 16, 2009
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Aquiline Capital Partners LLC
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Conning & Company
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November 10, 2008
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American Capital, Ltd.
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European Capital Limited
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September 29, 2009
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Electricite de France SA (EDF Group)
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Eagle Energy Partners I, L.P.
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February 20, 2009
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Agnelli Family (IFIL Group)
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Vision Investment Management Limited
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February 10, 2008
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Petershill Fund Offshore LP (a Goldman Sachs group fund)
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Capula Investment Management LLP
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January 31, 2008
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Deutsche Bank AG
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HedgeWorks, LLC
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January 10, 2008
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The Blackstone Group L.P.
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GSO Capital Partners, L.P.
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January 8, 2008
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Tailwind Financial Inc.
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Asset Alliance Corporation
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January 7, 2008
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ING Investment Management Americas
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Lincoln Vale
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December 31, 2007
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Trusco Capital Management, Inc.
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Alpha Equity Management LLC
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December 18, 2007
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Deerfield Triarc Capital Corp.
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Deerfield & Company LLC
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December 11, 2007
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Affiliated Managers Group, Inc.
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BlueMountain Capital Management
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December 10, 2007
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Citigroup, Inc.
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MetalMark Capital LLC
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November 26, 2007
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Skandinaviska Enskilda Banken AB
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Key Asset Management Group Limited
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November 19, 2007
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Eton Park Capital Management
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R6 Capital Management
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November 14, 2007
|
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Morgan Stanley
|
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Traxis Partners LP
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November 8, 2007
|
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Affiliated Managers Group, Inc.
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ValueAct Capital
|
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Traditional Asset Management Companies
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February 19, 2010
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Janus Capital Group Inc.
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INTECH Investment Management LLC
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February 12, 2010
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Hanwha Securities Company Ltd.
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Prudential Investment & Securities Co., Ltd.
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January 5, 2010
|
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Aviva PLC
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River Road Asset Management, LLC
|
December 20, 2009
|
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Piper Jaffray Companies
|
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Advisory Research Holdings, Inc.
|
December 14, 2009
|
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Affiliated Managers Group, Inc.
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Highbury Financial Inc.
|
October 19, 2009
|
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Invesco Ltd.
|
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Morgan Stanley Retail Asset Management
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September 30, 2009
|
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Ameriprise Financial, Inc.
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Columbia Management Group, LLC
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September 5, 2009
|
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Pacific Century Group
|
|
AIG Investments (American International Group Inc.s
investment advisory and asset management unit)
|
August 17, 2009
|
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Macquarie Group Limited
|
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Delaware Management Holdings, Inc.
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August 12, 2009
|
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Bank of New York Mellon Corporation
|
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Insight Investment Management (Global) Limited
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July 29, 2009
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The Sumitomo Trust and Banking Company, Limited
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Nikko Asset Management Co., Ltd.
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43
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|
Announcement Date
|
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Acquiror
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Target
|
|
June 12, 2009
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BlackRock, Inc.
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Barclays Global Investors
|
May 14, 2009
|
|
Alternative Asset Management Acquisition Corp.
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Great American Group, LLC
|
November 24, 2008
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Windy City Investments Holdings, LLC
|
|
Winslow Capital Management, Inc.
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August 14, 2008
|
|
Lazard Freres & Co. LLC
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Lazard Asset Management LLC
|
July 14, 2008
|
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Federated Investors, Inc.
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Prudent Bear Fund and Prudent Global Income Fund
|
July 7, 2008
|
|
Ameriprise Financial, Inc.
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J. & W. Seligman & Co. Incorporated
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April 16, 2008
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Pharos Capital Group LLC and TPG Capital, L.P.
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American Beacon Advisors, Inc.
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For each of the selected transactions identified above, Moelis
calculated the ratio of implied equity value to LTM EBITDA at
the time the transaction was announced. Moelis used equity value
and LTM EBITDA based on public filings and press releases. The
following table presents the results of such analysis:
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Implied Equity Value/LTM EBITDA
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Low
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High
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Mean
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Median
|
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Selected Alternative Asset Management Transactions
|
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8.1
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x
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8.5
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x
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8.3
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x
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8.3
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x
|
Selected Traditional Asset Management Transactions
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7.0
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x
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17.7
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x
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9.5
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x
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8.1
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x
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Moelis noted that given the sharp decrease in 2009 earnings due
to global economic downturn, the use of LTM EBITDA for GLG would
not provide an accurate representation of the normalized cash
flow profile for GLG going forward. Thus, for purposes of this
analysis Moelis applied precedent transaction LTM EBITDA
multiples to calendar year 2010 and 2011 estimated EBITDA for
GLG (based on the average of Wall Street research analysts
estimates).
In addition, for the 22 precedent merger and acquisition
transactions involving alternative asset management companies
and 18 precedent merger and acquisition transactions involving
traditional asset management companies reviewed, Moelis
calculated the ratio of implied equity value to AUM for the
target company for the latest available period at the time the
transaction was announced. Moelis used equity value and AUM data
based on public filings and press releases. The following table
presents the results of such analysis:
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|
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|
|
|
|
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|
|
Implied Equity Value/Target AUM
|
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Low
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High
|
|
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Mean
|
|
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Median
|
|
|
Alternative Asset Management Transactions
|
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0.6
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%
|
|
|
16.9
|
%
|
|
|
7.6
|
%
|
|
|
5.3
|
%
|
Traditional Asset Management Transactions
|
|
|
0.3
|
%
|
|
|
9.7
|
%
|
|
|
2.4
|
%
|
|
|
1.4
|
%
|
Based upon the foregoing and qualitative judgments related to
the characteristics of the selected precedent transactions,
Moelis selected a range of implied equity value to LTM EBITDA
multiples for the selected precedent transactions of 7.0x to
10.0x. Moelis then applied such multiple ranges to GLGs
2010 and 2011 estimated EBITDA, to derive an implied range of
equity values for each share of GLG common stock. Moelis also
selected a range of implied equity values as a percentage of
target AUM for the precedent transactions of 4% to 6% and
applied this range to GLGs AUM to derive an implied range
of equity values for each share of GLG common stock. The
following table sets forth the results of these calculations,
assuming equal per share consideration for all shares of GLG
common stock in the merger and the share exchange:
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|
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|
|
|
|
GLG
|
|
Implied Price per GLG Share
|
|
Implied Equity Value/2010E EBITDA
|
|
7.0x 10.0x
|
|
$1.65 $2.36
|
Implied Equity Value/2011E EBITDA
|
|
7.0x 10.0x
|
|
$3.05 $4.28
|
Implied Equity Value/AUM
|
|
4% 6%
|
|
$2.78 $4.11
|
Moelis noted that in each case, the merger consideration of
$4.50 per share in cash to be received by GLGs
stockholders (other than the Selling Stockholders) was above
such range.
44
Shares Traded
Analysis
Moelis reviewed the historical trading prices and volumes for
GLG common stock for the
12-month
period ended May 14, 2010. Moelis analyzed the merger
consideration of $4.50 per share in cash to be received by
GLGs stockholders (other than the Selling Stockholders) in
relation to such
12-month
periods high and low closing prices of GLG common stock,
which ranged from $2.58 to $4.52 per share. Moelis noted that
356.2 million shares of GLG common stock traded in the
12-month
period ended May 14, 2010 and approximately 99.5% of these
shares traded at or below $4.50 per share.
Purchase
Price Premium Analysis
Moelis performed a purchase price premium analysis based upon
the premiums paid in the 16 public company transactions that
were announced in the
12-month
period ended May 14, 2010 in which the target company was a
publicly traded North American company, the transaction value
was less than $3 billion and involved both stock and cash
consideration. For each transaction, Moelis calculated the
premium per share paid by the acquiror by comparing the
announced transaction value per share to the target
companys historical average closing share price during the
following periods: (i) one trading day prior to
announcement, (ii) five trading days prior to announcement
and (iii) 20 trading days prior to announcement. The
results of this analysis are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Trading
|
|
Five Trading Day
|
|
20 Trading Day
|
|
|
Day Prior
|
|
Average Prior
|
|
Average Prior
|
|
Median Purchase Price Premium
|
|
|
26.7
|
%
|
|
|
24.9
|
%
|
|
|
30.1
|
%
|
The reasons for and the circumstances surrounding each of the
transactions analyzed in the purchase price premium analysis
were diverse and there are inherent differences in the business,
operations, financial conditions and prospects of GLG and the
companies included in the purchase price premium analysis. In
order to arrive at a single implied price per share range for
GLG common stock, Moelis selected a representative range of
implied premiums for the transaction of 25% to 35% and applied
this range of premiums to the closing price of GLG common stock
on May 14, 2010 of $2.91, the last trading day before the
announcement of the transaction. This range was selected because
it reflected the median purchase price premiums listed above,
with an increased high end in order to yield a more conservative
analysis. The results of this analysis implied a price per share
range for GLG common stock of $3.64 to $3.93. Moelis noted that
the merger consideration of $4.50 per share in cash to be
received by GLGs stockholders (other than the Selling
Stockholders) was above such range.
Other
Information
The consideration to be paid in the merger to GLGs
stockholders (other than the Selling Stockholders) was
determined through negotiations between the special committee,
on the one hand, and Man, on the other hand, and the decision by
the special committee to enter into the merger agreement was
solely that of the special committee. Moelis acted as financial
advisor to the special committee in connection with and
participated in certain of the negotiations leading to the
merger. Moelis did not, however, recommend any specific amount
of consideration to GLG or the special committee or that any
specific amount of consideration constituted the only
appropriate consideration for the merger. The Moelis opinion and
financial analyses, taken together, were only one of many
factors considered by the special committee in its evaluation of
the merger and should not be determinative of the views of the
special committee or GLGs management with respect to the
merger or the merger consideration.
The special committee retained Moelis based upon Moeliss
experience and expertise. Moelis is an investment banking firm
with substantial experience in transactions similar to the
proposed merger. Moelis, as part of its investment banking
business, is continually engaged in the valuation of businesses
and securities in connection with business combinations and
acquisitions and for other purposes.
Under the terms of the engagement letter between Moelis and GLG,
GLG agreed to pay Moelis (i) a nonrefundable work fee of
$500,000 which will be offset, to the extent previously paid,
against the transaction fee described below, (ii) an
opinion fee of $1.5 million, which became payable upon
delivery of the Moelis opinion described above, and which fee
will be offset, to the extent previously paid, against the
transaction fee and (iii) a transaction fee of
$4.5 million plus 0.6% of the equity value (as defined in
the engagement letter) in excess of the equity value implied at
a price of $4.50 per share payable upon the closing of
(a) the sale of all of a majority of GLGs
45
equity securities to a third party acquiror, (b) the merger
or combination of GLG with that of a third party acquiror, or
(c) a third party acquirors acquisition of all or a
significant portion of the assets, properties or business of
GLG, which transaction fee is payable if, at any time prior to
the expiration of twelve months following the termination of
Moeliss engagement, GLG enters into an agreement that
results in a transaction described above, or consummates a
transaction described above. In addition, GLG agreed to pay
Moelis a termination fee of equal to 25% of any
termination fee,
break-up
fee, topping fee, expense
reimbursement or other form of compensation payable to GLG
or of the value of any option to purchase any securities or
assets that GLG is granted in the event that a transaction
described above fails to close following the execution of an
agreement with respect to such transaction, which termination
fee would be in lieu of and would not exceed the transaction fee
described above. In addition, GLG has agreed to indemnify Moelis
and its affiliates (and their respective directors, officers,
agents, employees and controlling persons) against certain
liabilities and expenses, including liabilities under the
federal securities laws, related to or arising out of
Moeliss engagement. Moelis may provide investment banking
services to GLG, Man and Mans affiliates in the future,
for which Moelis would expect to receive compensation.
Other
Written Presentations by Moelis
In addition to the presentation made to the special committee of
GLG on May 16, 2010 described above, Moelis submitted
additional written materials to the special committee on
May 6, 2010 and May 16, 2010. These written materials
have been filed as exhibits to the Schedule 13E-3 filed with the
SEC in connection with the merger, will be made available for
inspection and copying at the principal executive offices of GLG
during its regular business hours by any interested holder of
GLG common stock, and copies may be obtained by requesting them
in writing from GLG at the address provided under the caption
Where You Can Find More Information below. These
additional written materials do not constitute, or form the
basis of, an opinion of Moelis with respect to any matters.
Moelis provided these materials for the use and benefit of the
special committee in connection with the merger.
On May 6, 2010, Moelis made a written presentation to the
special committee to assist in the special committees
negotiations with Man. This presentation contained an outline of
the current status of the negotiations between the parties and
Moeliss preliminary valuation analyses (including a
comparable public companies analysis, a precedent transactions
analysis, a historical shares traded analysis, a purchase price
premium analysis and indications of market value of GLG), using,
at the direction of the special committee, estimates for GLG
sourced from one Wall Street research analyst. The financial
analyses in this presentation were based on market, economic and
other conditions as they existed as of the date of the
presentation, as well as other information that was available at
that time. Accordingly, the results of the financial analyses
presented on May 6, 2010 differed from those in the
May 16, 2010 presentation due to changes in those
conditions. Among other things, multiples attributable to
selected companies changed as those companies stock prices
changed, and implied transaction multiples changed as GLGs
and Mans financial results (as well as estimates prepared
by Wall Street research analysts) changed. In addition, in the
May 16, 2010 presentation and written opinion described
above GLG management directed Moelis to use the average of Wall
Street research analysts estimates for its analyses
instead of just one Wall Street research analyst.
On May 16, 2010, at the request of the special committee,
Moelis submitted a supplemental written presentation to the
special committee regarding Man based on publicly available
information that included (i) a current situation overview,
including reasons for Mans recent underperformance and
three-year stock price performance, (ii) a qualitative
comparison to GLG, including a high-water mark analysis, and
(iii) a summary of Wall Street research analysts estimates
and price targets.
On May 16, 2010, following the execution of the merger
agreement and at the request of the special committee, Moelis
updated its written presentation described above under
Opinion of Special Committees Financial
Advisor to include the final key terms of the merger
agreement and to revise certain non-material items.
Moeliss financial analyses in this presentation are in
substance the same as the financial analyses included in the
original May 16, 2010 presentation.
Opinion
of GLGs Financial Advisor
Goldman Sachs delivered its oral opinion, which was subsequently
confirmed in writing, to the GLG Board that, as of May 17,
2010 and based upon and subject to the factors and assumptions
set forth in its written opinion,
46
the Aggregate Consideration (defined below) to be paid to the
holders (other than Man and its affiliates) of shares of GLG
common stock, FA Sub 2 exchangeable shares and convertible notes
pursuant to the share exchange agreement and merger agreement
was fair from a financial point of view to such holders. The
Aggregate Consideration is equal to the sum of the
aggregate of (i) the right to receive $4.50 in cash into
which each outstanding share of GLG common stock (other than the
Rollover Shares (defined below) and shares held by Man and its
subsidiaries not specified in the merger agreement) will be
converted under the merger agreement (the Public
Consideration), (ii) the right to receive $4.50 in
cash in the merger into which each share of GLG common stock
into which convertible notes are converted prior to the merger
will be converted under the merger agreement (the
Convertible Consideration), (iii) the Man
ordinary shares for which shares of GLG common stock received
upon the exchange of FA Sub 2 exchangeable shares (the
Exchanged Shares) will be exchanged under the share
exchange agreement (the Exchangeable Consideration)
and (iv) the Man ordinary shares for which shares of GLG
common stock held by the Principals and the LPs (collectively,
the Principal Stockholders) (other than shares into
which convertible notes were converted and any shares acquired
in open market purchases) will be exchanged (the Rollover
Consideration, and such shares of GLG common stock,
together with the Exchanged Shares, the Rollover
Shares).
The full text of the written opinion of Goldman Sachs, dated
May 17, 2010, which sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as
Appendix E. Goldman Sachs provided its opinion for the
information and assistance of the GLG Board in connection with
its consideration of the transactions contemplated by the share
exchange agreement and merger agreement (the
Transactions). The Goldman Sachs opinion is not a
recommendation as to how any holder of shares of GLG common
stock, FA Sub 2 exchangeable shares
and/or
convertible notes should vote with respect to the Transactions
or any other matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
|
|
|
|
|
the merger agreement;
|
|
|
|
the share exchange agreement;
|
|
|
|
certain other agreements entered into by GLG as of May 17,
2010 in connection with the Transactions;
|
|
|
|
annual reports to stockholders and Annual Reports on
Form 10-K
of GLG for the three fiscal years ended December 31, 2007,
2008 and 2009, and annual reports of Man for the three fiscal
years ended March 31, 2007, 2008 and 2009;
|
|
|
|
the proxy statement of Freedom Acquisition Holdings, Inc.
(Freedom), dated October 11, 2007, relating to
the acquisition by Freedom of GLG Partners LP and certain
affiliated entities;
|
|
|
|
certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of GLG and certain interim reports to stockholders and quarterly
reports of Man;
|
|
|
|
the prospectus for the convertible notes;
|
|
|
|
certain other communications from GLG and Man to their
respective stockholders;
|
|
|
|
publicly available research analyst reports for GLG and Man;
|
|
|
|
certain internal financial analyses and forecasts for GLG
prepared by its management, as approved for Goldman Sachs
use by GLG (the Forecasts); and
|
|
|
|
certain synergies projected by GLGs management to result
from the Transactions, as approved for Goldman Sachs use
by GLG (the Synergies).
|
Goldman Sachs also held discussions with members of the senior
management of GLG and Man regarding their assessment of the
strategic rationale for, and the potential benefits of, the
Transactions and the past and current business operations,
financial condition, and future prospects of their respective
companies; reviewed the reported price and trading activity for
the shares of GLG common stock and the Man ordinary shares;
compared certain financial and stock market information for GLG
and Man with similar information for certain other companies the
47
securities of which are publicly traded; reviewed the financial
terms of certain recent business combinations in the financial
and asset management industries specifically and in other
industries generally; and performed such other studies and
analyses, and considered such other factors, as it considered
appropriate.
For purposes of rendering the opinion described above, Goldman
Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial, legal, regulatory, tax,
accounting and other information provided to, discussed with or
reviewed by it, and Goldman Sachs did not assume any
responsibility for any such information. In that regard, Goldman
Sachs has assumed with the consent of GLG that the Forecasts and
the Synergies were reasonably prepared on a basis reflecting the
best then currently available estimates and judgments of the
management of GLG. As GLG was aware, the management of Man did
not make available its forecasts of the future financial
performance of Man. With the consent of GLG, for purposes of
rendering the opinion described above, Goldman Sachs relied upon
published research analyst estimates of Man. In addition,
Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities (including any
contingent, derivative or other off-balance-sheet assets and
liabilities) of GLG or Man or any of their respective
subsidiaries, and Goldman Sachs was not furnished with any such
evaluation or appraisal. Goldman Sachs assumed that all
governmental, regulatory or other consents and approvals
necessary for the consummation of the Transactions would be
obtained without any adverse effect on GLG or Man or on the
expected benefits of the Transactions in any way meaningful to
its analysis. Goldman Sachs also assumed that the Transactions
would be consummated on the terms set forth in the share
exchange agreement and merger agreement without the waiver or
modification of any term or condition the effect of which would
be in any way meaningful to Goldman Sachs analysis.
Goldman Sachs opinion did not address the underlying
business decision of GLG to engage in the Transactions, or the
relative merits of the Transactions as compared to any strategic
alternatives that may have been available to GLG; nor did it
address any legal, regulatory, tax or accounting matters.
Goldman Sachs was not requested to solicit, and did not solicit,
interest from other parties with respect to an acquisition of,
or other business combination with, GLG or any other alternative
transaction. Goldman Sachs opinion addressed only the
fairness from a financial point of view, as of May 17,
2010, of the Aggregate Consideration to be paid to the holders
(other than Man and its affiliates) of shares of GLG common
stock, FA Sub 2 exchangeable shares and convertible notes
pursuant to the share exchange agreement and merger agreement.
Goldman Sachs did not express any view on, and its opinion did
not address, any other term or aspect of the share exchange
agreement or merger agreement or the Transactions or any term or
aspect of any other agreement or instrument contemplated by the
share exchange agreement or merger agreement or entered into or
amended in connection with the Transactions, including, without
limitation, other agreements being entered into by GLG as of the
date of the opinion in connection with the Transactions, the
Warrant Offers (as defined in the merger agreement), the
fairness of the Transactions to, or any consideration received
in connection therewith by, the holders of any other class of
securities, creditors, or other constituencies of GLG; nor as to
the fairness of the consideration to be paid to the holders of
the GLG warrants as provided in the merger agreement or the
amount or nature of any compensation to be paid or payable to
any of the officers, directors or employees of GLG, or class of
such persons, in connection with the Transactions, whether
relative to the Aggregate Consideration to be paid to the
holders of shares of GLG common stock, FA Sub 2 exchangeable
shares and convertible notes pursuant to the share exchange
agreement and the merger agreement or otherwise; nor as to the
allocation of the Aggregate Consideration as among the Public
Consideration, the Convertible Consideration, the Exchangeable
Consideration and the Rollover Consideration. Goldman Sachs did
not express any opinion as to the prices at which Man ordinary
shares would trade at any time or as to the impact of the
Transactions on the solvency or viability of GLG or Man or the
ability of GLG or Man to pay their obligations when they come
due. Goldman Sachs opinion was necessarily based on
economic, monetary market and other conditions as in effect on,
and the information made available to it as of, the date of the
opinion, and Goldman Sachs assumed no responsibility for
updating, revising or reaffirming its opinion based on
circumstances, developments or events occurring after the date
of the opinion. Goldman Sachs opinion was approved by a
fairness committee of Goldman, Sachs & Co.
For purposes of its analysis and opinion, Goldman Sachs was
preliminarily directed by GLG to use the average of the publicly
available research analysts estimates for GLG for 2010 and
2011. Management of GLG subsequently adopted the estimates set
forth under Certain Forward-Looking Financial
Information Projections and Research
48
Analysts Estimates as management projections and
confirmed the use of these estimates for purposes of Goldman
Sachs fairness opinion.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to the board of directors of GLG in
connection with rendering the opinion described above. The
following summary, however, does not purport to be a complete
description of the financial analyses performed by Goldman
Sachs, nor does the order of analyses described represent
relative importance or weight given to those analyses by Goldman
Sachs. Some of the summaries of the financial analyses include
information presented in tabular format. The tables must be read
together with the full text of each summary and are alone not a
complete description of Goldman Sachs financial analyses.
Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is
based on market data as it existed on or before May 17,
2010 and is not necessarily indicative of current market
conditions.
Premiums to Market Capitalization and Implied Transaction
Multiples. Goldman Sachs reviewed and analyzed
the premium of the Public Consideration, Exchangeable
Consideration and Rollover Consideration collectively, in each
case calculated based on the closing price of Man ordinary
shares on May 14, 2010 and a USD/GBP exchange rate of
1.45555, on the one hand, to the market capitalization of GLG on
March 25, 2010 (the last trading day prior to the date on
which Man was reported to be in talks with potential targets,
including GLG); to the highest and lowest market capitalizations
of GLG over the twelve months prior to May 14, 2010; and to
the market capitalization of GLG on May 14, 2010, in each
case, on the other hand.
The following table presents the results of this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium of Public,
|
|
|
|
|
Exchangeable and
|
|
|
|
|
Rollover
|
|
|
GLG Market
|
|
Consideration to GLG
|
|
|
Capitalization
|
|
Market Capitalization
|
|
|
($ Millions)
|
|
|
|
Based on March 25 closing price
|
|
|
827
|
|
|
|
51
|
%
|
Highest for twelve months ended May 14
|
|
|
1,395
|
|
|
|
(11
|
)%
|
Lowest for twelve months ended May 14
|
|
|
798
|
|
|
|
56
|
%
|
Based on May 14 closing price
|
|
|
903
|
|
|
|
38
|
%
|
Goldman Sachs calculated the enterprise value of GLG implied by
the Transactions and reviewed and analyzed multiples of such
enterprise value to the revenue of GLG for the twelve months
ended March 31, 2010 and to the estimated 2010 and 2011
earnings before interest, tax, depreciation and amortization, or
EBITDA, of GLG, based on the Forecasts, and such enterprise
value as a percentage of assets under management of GLG as of
March 31, 2010. The following table presents the results of
this analysis:
|
|
|
|
|
Enterprise Value(1) as a Percentage or Multiple of:
|
|
|
|
|
Assets Under Management
|
|
|
7.0
|
%
|
Revenue for twelve months ended March 31, 2010
|
|
|
5.5
|
x
|
Estimated 2010 EBITDA
|
|
|
19.8
|
x
|
Estimated 2011 EBITDA
|
|
|
10.5
|
x
|
|
|
|
(1) |
|
Enterprise value calculated net of $7 million cash used to
fund self-tender of Warrants at $0.129 per Warrant pursuant to
the merger agreement. |
Goldman Sachs also calculated the Aggregate Consideration based
on the closing price of Man ordinary shares on May 14, 2010
and a USD/GBP exchange rate of 1.45555 and reviewed and analyzed
multiples of the Aggregate Consideration to estimated 2010 and
2011 net income of GLG, based on the Forecasts. The
following table present the results of this analysis:
|
|
|
|
|
Aggregate Consideration as a Multiple of:
|
|
|
|
|
Estimated 2010 Net Income (as converted)(1)
|
|
|
22.6
|
x
|
Estimated 2011 Net Income (as converted)(1)
|
|
|
14.3
|
x
|
49
|
|
|
(1) |
|
This assumes all convertible notes had been converted into
shares of GLG common stock prior to January 1, 2010. |
Historical Exchange Ratio Analysis. Goldman
Sachs reviewed and considered the average implied historical
exchange ratios determined by dividing the daily closing prices
of shares of GLG common stock by the daily closing prices of the
Man ordinary shares, using the USD/GBP exchange rates in effect
on the relevant dates according to Bloomberg, during the period
from GLGs stock market debut via its merger with Freedom
on November 2, 2007 to May 14, 2010 and the two-year,
one-year, six-month, three-month and
year-to-date
periods ended May 14, 2010. In addition, Goldman Sachs
calculated the exchange ratio of the closing price of Man
ordinary shares to the closing price of shares of GLG common
stock on May 14, 2010. Goldman Sachs compared the
historical exchange ratios and average exchange ratios with the
exchange ratio received under the share exchange agreement. The
following table presents the results of this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Ratio
|
|
|
Historical Average
|
|
Under Share
|
|
|
Exchange Ratio
|
|
Exchange Agreement
|
|
Closing prices on May 14, 2010
|
|
|
0.90
|
x
|
|
|
1.0856
|
x
|
Year-to-date
through May 14, 2010
|
|
|
0.78
|
x
|
|
|
1.0856
|
x
|
Three months ended May 14, 2010
|
|
|
0.81
|
x
|
|
|
1.0856
|
x
|
Six months ended May 14, 2010
|
|
|
0.73
|
x
|
|
|
1.0856
|
x
|
Twelve months ended May 14, 2010
|
|
|
0.77
|
x
|
|
|
1.0856
|
x
|
Two years ended May 14, 2010
|
|
|
0.76
|
x
|
|
|
1.0856
|
x
|
November 2, 2007 to May 14, 2010
|
|
|
0.84
|
x
|
|
|
1.0856
|
x
|
Historical Share Price Analysis. Goldman Sachs
also reviewed and considered the closing prices of shares of GLG
common stock on May 14, 2010; the average closing prices
for shares of GLG common stock during the period from GLGs
stock market debut via its merger with Freedom on
November 2, 2007 to May 14, 2010 and the twelve-month,
six-month, three-month and
year-to-date
periods ended May 14, 2010. Goldman Sachs compared the
historical and average closing prices of shares of GLG common
stock to the cash consideration per share of GLG common stock to
be received under the merger agreement. The following table
presents the results of this analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payable
|
|
|
GLG Average
|
|
Under Merger
|
|
|
Share Price ($)
|
|
Agreement ($)
|
|
Closing price on May 14, 2010
|
|
|
2.91
|
|
|
|
4.50
|
|
Year-to-date
through May 14, 2010
|
|
|
3.02
|
|
|
|
4.50
|
|
Three months ended May 14, 2010
|
|
|
2.99
|
|
|
|
4.50
|
|
Six months ended May 14, 2010
|
|
|
3.04
|
|
|
|
4.50
|
|
Twelve months ended May 14, 2010
|
|
|
3.39
|
|
|
|
4.50
|
|
November 2, 2007 to May 14, 2010
|
|
|
5.76
|
|
|
|
4.50
|
|
Selected Companies Analysis. Goldman Sachs
reviewed and compared certain financial ratios and public market
multiples for GLG and Man with corresponding financial ratios
and public market multiples for the following selected publicly
traded corporations:
|
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|
|
|
European alternative asset managers:
|
|
|
|
|
|
Ashmore Group plc;
|
|
|
|
BlueBay Asset Management plc;
|
|
|
|
Gartmore Group Limited; and
|
|
|
|
Gottex Funds Management Holdings Limited;
|
50
|
|
|
|
|
North American alternative asset managers:
|
|
|
|
|
|
Fortress Investment Group LLC;
|
|
|
|
Och-Ziff Capital Management Group LLC; and
|
|
|
|
Sprott Inc.; and
|
|
|
|
|
|
United Kingdom traditional asset managers:
|
|
|
|
|
|
Aberdeen Asset Management plc;
|
|
|
|
Henderson Group plc; and
|
|
|
|
Schroders plc.
|
Although none of the selected companies is directly comparable
to GLG or Man, these selected companies were chosen because they
are publicly traded companies with operations that for purposes
of analysis may be considered similar to certain operations of
GLG and Man.
Goldman Sachs calculated and compared the financial ratios and
public market multiples for the selected companies based on
publicly available information, estimates from Institutional
Brokers Estimate System (IBES), USD/GBP
exchange rates in effect on the relevant dates according to
Bloomberg and closing prices of shares of the selected companies
on May 14, 2010. Goldman Sachs calculated the financial
ratios and public market multiples for GLG and Man based on
publicly available information, IBES estimates for Man and the
Forecasts for GLG, the closing prices of shares of GLG common
stock on March 25, 2010 (the last trading day prior to the
date on which Man was reported to be in talks with potential
targets, including GLG) and May 14, 2010, and the equity
market capitalization and enterprise value of GLG implied by the
Transactions. With respect to each of GLG, Man and the selected
companies, Goldman Sachs calculated:
|
|
|
|
|
multiples of equity market capitalization to estimated 2010 and
2011 net income;
|
|
|
|
multiples of enterprise value to estimated 2010 and 2011
EBITDA; and
|
|
|
|
multiples of enterprise value to assets under management.
|
The results of this analysis can also be summarized as follows:
|
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Selected Companies (Including
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Man and Excluding GLG)
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GLG
|
Equity Market Capitalization as a Multiple of:
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Range
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Median
|
|
Transaction
|
|
March 25
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May 14
|
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2010E Net Income
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7.7x 16.7x
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13.2
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x
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22.6
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x
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14.6
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x
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15.8
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x
|
2011E Net Income
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6.5x 14.0x
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|
9.6
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x
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|
14.3
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x
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9.2
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x
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10.0
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x
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Selected Companies (Including
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Enterprise Value as a Percentage or
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Man and Excluding GLG)
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GLG
|
Multiple of:
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Range
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Median
|
|
Transaction
|
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March 25
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May 14
|
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Assets Under Management
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1.1% 24.9%
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2.4
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%
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7.0
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%
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4.6
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%
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5.2
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%
|
2010E EBITDA
|
|
5.1x 11.9x
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8.9
|
x
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|
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19.8
|
x
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13.1
|
x
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14.8
|
x
|
2011E EBITDA
|
|
3.9x 10.0x
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|
7.1
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x
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10.5
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x
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6.9
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x
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7.8
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x
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|
Selected Companies (Including GLG(1) and Excluding Man)
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|
Equity Market Capitalization as a Multiple of:
|
|
Range
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Median
|
|
Man
|
|
2010E Net Income
|
|
7.7x 16.7x
|
|
|
14.0
|
x
|
|
|
11.2
|
x
|
2011E Net Income
|
|
6.5x 14.0x
|
|
|
10.0
|
x
|
|
|
7.7
|
x
|
|
|
|
(1) |
|
Multiples for GLG are based on closing price on May 14,
2010. |
51
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|
Selected Companies (including GLG(1) and Excluding Man)
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|
Enterprise Value as a Percentage or Multiple of:
|
|
Range
|
|
Median
|
|
Man
|
|
Assets Under Management
|
|
1.1% 24.9%
|
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|
2.4
|
%
|
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|
8.4
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%
|
2010E EBITDA
|
|
6.2x 14.8x
|
|
|
9.4
|
x
|
|
|
5.1
|
x
|
2011E EBITDA
|
|
5.4x 10.0x
|
|
|
7.2
|
x
|
|
|
3.9
|
x
|
|
|
|
(1) |
|
Multiples and percentages for GLG are based on closing price on
May 14, 2010. |
Present Value of Future Value of GLG
Analysis. Goldman Sachs performed an illustrative
analysis of the implied present value of GLGs future
value, as reflected by GLGs future convertible
note-diluted market capitalization, using the Forecasts. Goldman
Sachs first calculated the implied future value of GLG as of
December 31, 2010, by applying a range of price to forward
earnings multiples of 11.3 x to 12.3 x to estimated
2011 net income (excluding interest payable on the
convertible notes), and then discounted each of these values
back to May 14, 2010, using a range of discount rates from
10.0% to 14.0%, reflecting estimates of GLGs cost of
equity. This analysis resulted in a range of implied present
values of GLG of $1,125 million to $1,248 million.
Present Value of Mans Future Share Price
Analysis. Goldman Sachs performed an illustrative
analysis of the implied present value of the future price of a
Man ordinary share using IBES estimates. Goldman Sachs first
calculated the implied future value of a Man ordinary share as
of December 31, 2010, by applying a range of price to
forward earnings multiples of 11.2 x to 14.2 x to the estimated
2011 U.S. dollar earnings per Man ordinary share, and then
discounted each of these values back to May 14, 2010, using
a range of discount rates from 9.0% to 13.0%, reflecting
estimates of Mans cost of equity. This analysis resulted
in a range of implied present values of Man ordinary shares of
$4.15 to $5.38.
Goldman Sachs also performed an illustrative analysis of the
implied present values of the future price of a Man ordinary
share pro forma for completion of the Transactions using IBES
estimates for Man, or a pro forma Man ordinary share, the
Forecasts and the Synergies. Goldman Sachs first calculated the
implied future values of a pro forma Man ordinary share as of
December 31, 2010, by applying Man and a range of blended
price to forward earnings multiples of 11.2 x to 11.8 x to the
estimated 2011 U.S. dollar earnings per pro forma Man
ordinary share, both with and without reflecting the earnings
per share accretion from the Synergies, and then discounted each
of these values back to May 14, 2010, using a range of
discount rates from 9.0% to 13.0%, reflecting estimates of the
combined companys cost of equity. This analysis resulted
in a range of implied present values of pro forma Man ordinary
shares, without reflecting the earnings per share accretion from
the Synergies, of $4.51 to $4.88 and, with reflecting the
earnings per share accretion from the Synergies, of $4.69 to
$5.07.
Pro Forma Transaction Analysis. Goldman Sachs
prepared illustrative pro forma analyses of the potential
financial impact of the Transactions using the Synergies, the
Forecasts for GLG and the IBES estimates for Man, in each case
for fiscal year 2011. The Synergies included GLGs
estimated $50 million pre-tax synergies phased in at 25%
and 100% for the 2011 fiscal year, which, on the basis of the
blended tax rate estimated by GLG, would respectively result in
an estimated $10 million in post-tax phased in synergies
and $40 million in post-tax phased in synergies for the
2011 fiscal year. Using these figures, Goldman Sachs compared
the IBES estimate of earnings per Man ordinary share for fiscal
year 2011, on a standalone basis, to the projected earnings per
pro forma Man ordinary share for fiscal year 2011. Based on such
analyses, the Transactions would be accretive to Mans
shareholders on an earnings per share basis both before and
after the Synergies, whether phased in 25% or 100%, for fiscal
year 2011, which can be summarized as follows:
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With 25%
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With Fully
|
|
|
Phased-in Synergies
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Phased-in Synergies
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|
(Estimated FY 2011)
|
|
(Estimated FY 2011)
|
|
Accretion / (Dilution) (Pre Synergies)
|
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|
2.5
|
%
|
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|
2.5
|
%
|
Accretion / (Dilution) (Post Synergies)
|
|
|
4.3
|
%
|
|
|
9.6
|
%
|
52
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather, Goldman
Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transactions used
in the above analyses as a comparison are directly comparable to
GLG or Man or the Transactions.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs providing its opinion to the GLG Board as to the
fairness from a financial point of view to holders (other than
Man and its affiliates) of shares of GLG common stock, FA Sub 2
exchangeable shares and convertible notes of the Aggregate
Consideration to be paid pursuant to the share exchange
agreement and merger agreement. These analyses do not purport to
be appraisals nor do they necessarily reflect the prices at
which businesses or securities actually may be sold. Analyses
based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly
more or less favorable than suggested by these analyses. Because
these analyses are inherently subject to uncertainty, being
based upon numerous factors or events beyond the control of the
parties or their respective advisors, none of GLG, Man, Goldman
Sachs or any other person assumes responsibility if future
results are materially different from those forecast.
The Aggregate Consideration was determined through negotiations
among GLG, the special committee, the Principals and Man and was
approved by the special committee of the GLG Board and by the
GLG Board. Goldman Sachs provided advice to GLG during these
negotiations. Goldman Sachs did not, however, recommend any
specific amount or allocation of consideration to GLG or its
board of directors or that any specific amount or allocation of
consideration constituted the only appropriate consideration for
the Transactions.
As described above, Goldman Sachs opinion to the GLG Board
was one of many factors taken into consideration by the GLG
Board in making its determination to approve the share exchange
agreement and merger agreement. The foregoing summary does not
purport to be a complete description of the analyses performed
by Goldman Sachs in connection with the fairness opinion. The
foregoing summary is qualified in its entirety by reference to
the written opinion of Goldman Sachs attached as
Appendix E, but does describe all material bases for and
methods of arriving at the opinions findings.
Goldman Sachs International and its affiliates are engaged in
investment banking and financial advisory services, commercial
banking, securities trading, investment management, principal
investment, financial planning, benefits counseling, risk
management, hedging, financing, brokerage activities and other
financial and
non-financial
activities and services for various persons and entities. In the
ordinary course of these activities and services, Goldman Sachs
International and its affiliates may at any time make or hold
long or short positions and investments, as well as actively
trade or effect transactions, in the equity, debt and other
securities (or related derivative securities) and financial
instruments (including bank loans and other obligations) of
third parties, GLG, Man and any of their respective affiliates
and any affiliates of the Principal Stockholders or any currency
or commodity that may be involved in the Transactions for their
own account and for the accounts of their customers. Goldman
Sachs acted as financial advisor to GLG in connection with, and
has participated in certain of the negotiations leading to, the
Transactions. Goldman Sachs has provided certain investment
banking and other financial services to GLG and its affiliates
from time to time for which its investment banking division has
received, and may receive, compensation. Goldman Sachs also has
provided certain investment banking and other financial services
to Man and its affiliates from time to time for which its
investment banking division has received, and may receive,
compensation. Goldman Sachs also may provide investment banking
and other financial services to GLG, Man, the Principal
Stockholders and their respective affiliates in the future for
which its investment banking division may receive compensation.
However, except for GLGs engagement of Goldman Sachs in
connection with the Transaction, during the two-year period
ended May 17, 2010, Goldman Sachs has not been engaged by
GLG, Man or the Individual Principals to provide investment
banking and other financial services for which it has received
compensation. Certain Principal Stockholders are former
employees of Goldman Sachs International or its affiliates.
53
The board of directors of GLG selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the Transactions. Pursuant to a letter
agreement dated May 14, 2010 and amended on May 16,
2010, GLG engaged Goldman Sachs to act as its financial advisor
in connection with the possible sale of all of GLG. Pursuant to
the terms of this engagement letter, GLG has agreed to pay
Goldman Sachs a transaction fee of approximately
$4 million, with $1 million of the fee having been
payable upon the execution of the share exchange agreement and
merger agreement and the remainder of the fee being payable upon
consummation of the Transactions. In addition, GLG has agreed to
reimburse Goldman Sachs for its expenses arising, including
attorneys fees and disbursements, and to indemnify Goldman
Sachs and related persons against certain liabilities that may
arise out of, GLGs engagement of Goldman Sachs, including
liabilities under federal securities laws.
Other
Presentations by Goldman Sachs
In addition to the presentation made to the board of directors
of GLG on May 16, 2010 described above, Goldman Sachs also
prepared written materials for a presentation to the board of
GLG on April 29, 2010 and delivered written and oral
presentations to members of the management of GLG on
October 1, 2009, February 23, 2010, March 6, 2010
and April 30, 2010. Copies of these written materials have
been filed as exhibits to the
Schedule 13E-3
filed with the SEC in connection with the Transactions and will
be made available for inspection and copying at the principal
executive offices of GLG during its regular business hours by
any interested holder of GLG common stock. Copies may be
obtained by requesting them in writing from GLG at the address
provided under the caption Where You Can Find More
Information below.
None of these other written or oral presentations by Goldman
Sachs, alone or together, constitute, or form the basis of, an
opinion of Goldman Sachs with respect to the Aggregate
Consideration to be paid pursuant to the share exchange
agreement and merger agreement. Information contained in these
other written and oral presentations to GLG management is
substantially similar to the information provided in Goldman
Sachs written presentation to the board of directors of
GLG on May 16, 2010, as described above. The
October 1, 2009 materials contained an analysis of
Mans business fundamentals and preliminary valuation,
strategic, structure and capital markets considerations. The
February 23, 2010 materials contained a review of GLG and
Man financial projections based on research analyst estimates,
preliminary financial analyses, including market performance,
selected companies and pro forma transaction analyses and
analysis at various prices, a discussion of potential sources of
synergies and preliminary areas of investigation of Man. The
March 6, 2010 materials contained an updated review of GLG
and Man financial projections based on research analyst
estimates and preliminary financial analyses, including market
performance, selected companies and pro forma transaction
analyses and analysis at various prices. The April 29, 2010
materials contained an overview of Mans business and
preliminary financial analyses, including market performance,
selected companies and implied transaction multiples analyses
and analysis at various prices. The April 30, 2010
materials contained preliminary financial analyses, including
implied transaction multiples and selected companies analyses
and analysis at various prices. These other written and oral
presentations by Goldman Sachs contained, among other things,
the following types of financial analyses:
|
|
|
|
|
market performance analysis;
|
|
|
|
analysis at various prices;
|
|
|
|
implied transaction multiples analysis;
|
|
|
|
pro forma transaction analysis; and
|
|
|
|
selected companies analysis.
|
Not all of the other written and oral presentations contained
all of the financial analyses listed above. The financial
analyses in these written presentations were based on market,
economic and other conditions as they existed as of the dates of
the respective presentations as well as other information that
was available at those times. Accordingly, the results of the
financial analyses differed due to changes in those conditions.
Among other things, multiples attributable to selected companies
changed as those companies stock prices changed, and
implied transaction multiples changed as GLGs and
Mans financial results (as well as projections based on
research
54
analyst estimates) changed. Finally, Goldman Sachs continued to
refine various aspects of its financial analyses with respect to
GLG and Man over time.
Purpose
and Reasons for the Merger
Man,
Holdco and Merger Sub
Under the rules governing going private
transactions, Man, Holdco and Merger Sub are deemed to be
engaged in a going private transaction and are
required to provide certain information regarding the purposes
for the merger and share exchange and the reasons for the
structure of the merger and share exchange. Man, Holdco and
Merger Sub are making the statements included in this
sub-section
solely for the purposes of complying with the requirements of
Rule 13e-3
and related rules under the Exchange Act.
If the merger and share exchange are completed, Man will,
indirectly through Holdco, own 100% of GLG. For Man, Holdco and
Merger Sub, the purpose of the merger and share exchange is to
effectuate the transactions contemplated by the merger agreement
and share exchange agreement and allow Man to bear the rewards
and risks of such ownership after GLGs shares cease to be
publicly traded.
Man has had surplus capital and liquid resources at its disposal
for some time. From time to time, the Man Board considered
acquisitions that are complementary to Mans strategy, in
particular equity long/short managers. Man also evaluates
potential acquisition opportunities against strategic criteria
and, having considered such criteria, believes that GLG is a
strong strategic fit.
Man, Holdco and Merger Sub believe that the merger and share
exchange will provide substantial strategic and commercial
benefits to Man shareholders. These arise from the combination
of two established investment management businesses with
complementary investment strategies and the integration of
distribution and relationship management, structuring and
operations between the firms. The fund product offerings of GLG
are centered around the discretionary investment style of
GLGs trading teams. Mans fund product offerings
generally draw on Man subsidiary AHLs systematic managed
futures trading style and/or on its multi-manager business,
which allocates investor capital to a series of different hedge
fund strategies. In addition, the two businesses have a
complementary geography of distribution franchises and
investors, offering the opportunity to market products into new
markets and to new investors. After the closing of the merger
and the share exchange, Man has the potential to add significant
incremental funds under management through combining GLGs
investment offering with Mans structuring and distribution
expertise. The low correlation of performance between the
quantitative investment style of Man and the discretionary
investment style of GLG is expected to provide greater stability
in the combined performance fee prospects and the creation of
new high margin products for distribution. Additionally, Man,
Holdco and Merger Sub believe that the merger and the share
exchange will result in the expansion of the open-ended product
offerings in onshore markets in single manager and combination
formats to broaden and facilitate the raising of new assets in
those markets. Furthermore, Man, Holdco and Merger Sub believe
that there will be the potential for a subsequent organic build
out of discretionary investment strategies by Man following
completion of the merger and share exchange.
In addition, Man has identified potential annual run-rate cost
savings after completion of the merger and share exchange of
approximately $50 million with one-third of such savings
expected to be achieved in Mans fiscal year ending
March 31, 2011 and the balance expected to be achieved in
the first six months of the fiscal year ending March 31,
2012. Man expects that these cost savings will come from a
combination of eliminating overlapping central functions, the
integration of infrastructure and operational support areas such
as technology, selected real estate savings and the delisting
and deregistering of GLG in due course. The estimated cost of
achieving these potential annual cost savings is
$25 million.
After taking into consideration the Perella Weinberg sensitivity
analysis showing the impact on earnings accretion/dilution of
different levels of cost savings described under
Financial Analyses of the Financial Advisor
to Man May 13th Materials, and following
Mans assessment of the actions necessary to achieve the
potential cost savings, Man believes that the acquisition will
be earnings accretive in the financial year ending
March 31, 2012 and earnings neutral in the financial year
ending March 31, 2011. Nothing in this subsection is
intended to be a profit estimate for any period or a forecast of
future profits, and statements relating to earnings
55
accretion should not be interpreted to mean that Mans
earnings per share for the current or future financial periods
will necessarily match or exceed Mans historical published
earnings per share. Statements included in this subsection in
relation to earnings accretion are stated before amortization of
intangibles arising from the acquisition.
Man, Holdco and Merger Sub believe that structuring the merger
and share exchange as a merger and a share exchange is
preferable to other transactions structures for the following
reasons:
|
|
|
|
|
the merger is preferable to other transaction structures for
acquiring the outstanding common stock of GLG held by
stockholders other than the Selling Stockholders (the
Publicly Held Stock) and GLG common stock held by
the Selling Stockholders not subject to the share exchange
because the merger:
|
|
|
|
|
|
enables Man to acquire all of the Publicly Held Stock at the
same time; and
|
|
|
|
|
|
represents an opportunity for GLGs stockholders (other
than the Selling Stockholders, except to the extent such Selling
Stockholders acquired shares (i) on the open market prior
to the signing of the share exchange agreement or
(ii) through conversion of their convertible notes prior to
the closing of the merger) to receive fair value in cash for
their shares of GLG common stock; and
|
|
|
|
|
|
the share exchange is preferable to other transaction structures
for acquiring the equity interests of the Selling Stockholders
not subject to the merger because the share exchange enables:
|
|
|
|
|
|
Man to align the interests of the Selling Stockholders with
Mans shareholders by providing them with Man ordinary
shares, which, in turn, also reflect an indirect continuing
investment in GLG, as the surviving corporation, in light of the
continuing roles which the Individual Principals will have in
Mans business after the merger and the share
exchange; and
|
|
|
|
Man to offer its ordinary shares as consideration in order to
achieve the alignment referred to above pursuant to an exemption
from the registration requirements under the Securities Act of
1933, as amended, which we refer to as the Securities
Act.
|
The
Principals
Under the rules governing going private
transactions, the Principals are deemed to be engaged in a
going private transaction and are required to
provide certain information regarding the purposes for the
merger and the share exchange and the reasons for the structure
of the merger and the share exchange. The Principals are making
the statements included in this
sub-section
solely for the purposes of complying with the requirements of
Rule 13e-3
and related rules under the Exchange Act.
The Principals believe that the acquisition of GLG by Man:
|
|
|
|
|
combines two highly complementary businesses, both focused on
delivering long-term investment performance;
|
|
|
|
strengthens and enhances the flexibility of the GLG platform;
|
|
|
|
adds additional distribution and structuring capabilities;
|
|
|
|
broadens the range of products and services for GLGs
investing clients;
|
|
|
|
deepens infrastructure and capital base;
|
|
|
|
preserves GLGs core investment philosophy and client
orientation; and
|
|
|
|
allows management (including the Individual Principals) to focus
on the business of GLG without the burden or distraction of
being a U.S. publicly traded company.
|
In addition, the bifurcated structure of the acquisition
transaction facilitated the accomplishment of the transaction
for all of the stockholders of GLG because (1) Man would
not have wanted to proceed with the transaction unless
(a) the Selling Stockholders would become significant
shareholders in Man, such that their incentives would be aligned
with those of Mans shareholders, and (b) Man could,
using this structure, offer its
56
ordinary shares as consideration pursuant to an exemption from
the registration requirements under the Securities Act, and
(2) the special committee would not have approved the share
exchange transaction (and the related waiver of transfer
restrictions under the GLG Shareholders Agreement) unless the
unaffiliated stockholders were to receive a significant premium
to the trading price of GLG common stock immediately prior to
the public announcement of the proposed merger.
The decision by the Principals to engage in the transaction at
the present time was influenced by the fact that GLGs
business had changed substantially during 2008 and 2009 against
a backdrop of severe capital market dislocations, redemptions by
investors in GLG funds and managed accounts, and decreased
investment performance. While GLG had undertaken various
initiatives to strengthen its platform, increase its overall AUM
and improve its cost structure, the Principals remained
concerned, given market conditions at such time, about the
potentially protracted recovery of higher fee-yielding assets,
uncertainty about the prospects of geographic expansion outside
of GLGs historic UK and European markets and a challenging
macroeconomic environment. They concluded that a transaction
with Man offered a better opportunity for an accelerated
recovery of GLGs core business by combining two highly
complementary businesses than pursuing a recovery on a
stand-alone basis.
The primary detriments of the acquisition transaction to the
Principals are that they will bear the risk of any possible
decrease in the earnings, growth or value of the combined Man
and GLG business following the merger, and that all of the
ordinary shares of Man to be received by them in the share
exchange will be subject to a Share
Lock-Up Deed
of Trust described under Interests of Certain
Persons in the Merger Share
Lock-Up
below.
As a result of the transaction, the interests of the Principals
in the net book value and net earnings of GLG will decrease from
a direct interest of approximately 44% (approximately negative
$126 million and negative $158 million, respectively)
to an indirect interest (though ownership of Man ordinary
shares) of approximately 10% (approximately negative
$29 million and negative $36 million, respectively),
Mans interest in the net book value and net earnings of
GLG will increase from 0% to 100% (approximately negative
$286 million and negative $359 million, respectively)
as a result of its acquisition of 100% of GLGs shares, and
the GLG unaffiliated stockholders interest in the net book
value and net earnings of GLG will decrease from approximately
51% (approximately negative $146 million and negative
$183 million, respectively) to 0% in exchange for the $4.50
per share in cash to be received upon the consummation of the
merger. The net book value numbers specified above are based on
GLGs June 30, 2010 financial statements and the net
earnings numbers specified above are based on GLGs 2009
annual financial statements.
The primary benefits and detriments of the merger to GLGs
unaffiliated shareholders are the positive and negative factors,
respectively, described under Fairness of the
Merger and Recommendations of the Special Committee and the GLG
Board The Special Committee above.
The primary benefits and detriments of the merger to GLG are the
positive and negative factors, respectively, considered by the
GLG Board as described under Fairness of the
Merger and Recommendations of the Special Committee and the GLG
Board The GLG Board above.
Position
as to the Fairness of the Merger
Man,
Holdco and Merger Sub
Man, Holdco and Merger Sub are making the statements included in
this section solely for the purposes of complying with the
requirements of
Rule 13e-3
and related rules under the Exchange Act. The views of Man,
Holdco and Merger Sub should not be construed as a
recommendation to any stockholder as to how that stockholder
should vote on the proposal to adopt the merger agreement.
Man, Holdco and Merger Sub endeavored to negotiate the terms of
a transaction that would be most favorable to them, and not to
the stockholders of GLG, and, accordingly, did not negotiate the
merger agreement with a goal of obtaining terms that were fair
to such stockholders. None of Man, Holdco or Merger Sub believes
that it has or had any fiduciary duty to GLG or its
stockholders, including with respect to the merger and its
terms. GLGs unaffiliated stockholders were, as described
elsewhere in this proxy statement, represented by the special
committee that negotiated with Man, Holdco and Merger Sub on
their behalf, with the assistance of independent legal and
financial advisors.
57
Accordingly, Man, Holdco and Merger Sub did not undertake an
independent evaluation of the merger or the share exchange or
engage a financial advisor, in each case, for the purpose of
evaluating the fairness of the merger or the share exchange to
GLG or its stockholders. Man, Holdco and Merger Sub did not
participate in the deliberations of the special committee
regarding, and did not receive advice from the special
committees independent legal or financial advisors as to,
the fairness of the merger or the share exchange to GLGs
unaffiliated stockholders. Man, Holdco and Merger Sub believe
that the proposed merger and the share exchange are
substantively fair to GLGs unaffiliated stockholders based
on the following factors:
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the current and historical market prices of GLG common stock,
including the fact that the $4.50 per share consideration in the
merger represents a premium of approximately 55% to the closing
price on May 14, 2010 and approximately 41% over the
average closing prices for the
30-day
trading period ending on May 14, 2010, the last trading day
prior to the date on which the merger and share exchange were
publicly announced;
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the merger consideration is all cash, allowing GLGs
unaffiliated stockholders to immediately realize a certain and
fair value for all their shares of GLG common stock;
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the per share consideration in the merger represented a premium
of $1 as of the date the proposed merger was publicly announced,
over the value of the per share consideration in the share
exchange, which premium may not be reduced to less than $0.25
per share on the closing date;
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the merger is not subject to a financing condition, which
reduces the execution risk attached to the completion of the
merger and thus makes it more likely that the merger will be
consummated promptly upon satisfaction of the conditions to the
completion of the merger as described in this proxy
statement; and
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the merger will provide liquidity for GLGs unaffiliated
stockholders without incurring brokerage and other costs
typically associated with market sales.
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Man, Holdco and Merger Sub also considered the following
potentially negative factors:
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GLGs unaffiliated stockholders will receive consideration
in the merger in the form of cash in exchange for their shares
of GLG common stock and will cease to participate in the future
earnings or growth, if any, of GLG or benefit from increases, if
any, in the value of GLG following completion of the merger;
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the Selling Stockholders will receive consideration in the share
exchange in the form of Man ordinary shares, and will have an
indirect continuing investment in GLG, as the surviving
corporation, and will participate in the future earnings and
growth, if any, of GLG
and/or Man
and will benefit from increases, if any, in the value of GLG
and/or Man
following completion of the share exchange;
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the cash consideration to be received by GLGs unaffiliated
stockholders generally will be taxable; and
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there is a risk that conditions to the completion of either the
merger or the share exchange may not be satisfied and that, as a
result, neither the merger nor the share exchange will be
completed.
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Man, Holdco and Merger Sub believe that the merger and the share
exchange are procedurally fair to GLGs unaffiliated
stockholders based on the following factors, including the
factors considered by, and the findings of, the special
committee and the board of directors of GLG with respect to the
fairness of the merger and the share exchange, which Man, Holdco
and Merger Sub adopt:
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the GLG Board established the special committee to negotiate
with Man, Holdco and Merger Sub, which committee consists of
directors who are not officers or employees of GLG or Selling
Stockholders, or affiliated with the Selling Stockholders, Man,
Holdco or Merger Sub. Man, Holdco and Merger Sub believe that
the special committee was therefore able to negotiate a merger
agreement, which the special committee believes to be fair to,
and in the best interests of, GLGs stockholders (other
than the Selling Stockholders) without the potential conflicts
of interest that the foregoing relationships otherwise would
have presented;
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the special committee retained its own legal advisors,
Winston & Strawn LLP and Abrams & Bayliss LLP,
which in the special committees view had no relationship
that would compromise its independence;
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the special committee retained its own financial advisor,
Moelis & Company LLC, which, in the special
committees view, had no relationship that would compromise
its independence;
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58
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the special committee had the authority to reject the merger and
the share exchange;
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the special committee unanimously (i) determined that
(1) it is in the best interests of GLG and its stockholders
for GLG to enter into the merger agreement, and (2) the
transactions contemplated by the merger agreement, including the
merger, the share exchange agreement and the voting and support
agreement are advisable and fair to GLG and its unaffiliated
stockholders, (ii) approved the waiver of the restrictions
on transfer applicable to shares of capital stock of GLG held by
the Selling Stockholders under the GLG Shareholders Agreement,
and (iii) recommended that the GLG Board (1) determine
it is in the best interests of GLG and its stockholders for GLG
to enter into the merger agreement, (2) authorize and
approve the execution, delivery and performance by GLG of the
merger agreement (subject to the Minority Stockholder Approval),
(3) waive the restrictions on transfer applicable to shares
of GLG capital stock held by the Selling Stockholders under the
GLG Shareholders Agreement, as requested by the Selling
Stockholders, (4) approve the share exchange agreement and
the consummation of the transactions contemplated thereby,
(5) submit the adoption of the merger agreement to a vote
at a special meeting of GLG stockholders called for that
purpose, and (6) recommend that stockholders of GLG vote to
adopt the merger agreement at the special meeting;
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the merger consideration and other terms and conditions of the
merger agreement were the result of extensive negotiations
between Man and the special committee and their respective
independent legal and financial advisors;
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Man did not participate in, or have any influence over, the
conclusions reached by the special committee or the negotiating
positions of the special committee;
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the members of the special committee have no financial interest
in the merger that is different from that of GLG unaffiliated
stockholders, other than as follows:
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pursuant to the terms of the merger agreement, GLG is required
to use reasonable best efforts to launch a tender offer to
purchase all of its outstanding warrants to purchase shares of
GLG common stock, including warrants held by certain directors
who are members of the special committee;
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indemnification and directors and officers liability
insurance coverage will continue to be provided by the surviving
corporation in the merger to the directors who are members of
the special committee; and
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compensation will be paid to the directors serving on the
special committee;
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GLG did not enter into any exclusivity arrangements with Man,
Holdco and Merger Sub prior to the signing of the merger
agreement;
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the special committee received from Moelis an oral opinion,
subsequently confirmed by delivery of a written opinion dated
May 16, 2010 to the effect that, as of that date and based
upon and subject to the limitations and qualifications set forth
therein, the consideration of $4.50 per share in cash to be
received by GLG stockholders (other than the Selling
Stockholders) in the merger was fair from a financial point of
view to such stockholders other than the Selling
Stockholders; and
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GLGs Board received an oral opinion, which was
subsequently delivered in writing, from Goldman Sachs
International, that, as of May 17, 2010 and based upon and
subject to the factors and assumptions set forth in its written
opinion, the Aggregate Consideration to be paid to holders
(other than Man and its affiliates) of shares of GLG common
stock, FA Sub 2 exchangeable shares and convertible notes
pursuant to the share exchange agreement and the merger
agreement was fair from a financial point of view to such
holders.
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Man, Holdco and Merger Sub believe the merger and the share
exchange are procedurally and substantively fair to GLGs
unaffiliated stockholders, for the reasons cited above, and in
particular:
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the merger agreement provides for a nonwaivable condition that
the merger agreement be adopted not only by the holders of a
majority of the outstanding shares of GLG common stock and
preferred stock, voting as a single class, but also by the
holders of a majority of the outstanding shares of GLG common
stock (other than the Selling Stockholders and their affiliates,
Man and its affiliates, GLG and its affiliates (other than the
directors who are members of the special committee) and
employees of GLG);
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59
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GLGs and the Selling Stockholders ability, under
certain circumstances, to provide information to,
and/or
participate in discussions or negotiations with, third parties
regarding other proposals;
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GLGs ability, under certain circumstances, to terminate
the merger agreement in order to enter into a definitive
agreement related to a superior proposal, subject to paying a
termination fee of $48 million (equal to approximately 3%
of the equity value of the merger and the share exchange, which
was subsequently reduced to $26 million);
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the termination of the Selling Stockholders agreement to
vote in favor of the adoption of the merger agreement and
against other takeover proposals upon any termination of the
merger agreement by GLG to accept a superior proposal, thus
permitting the Selling Stockholders to support any such superior
proposal; and
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the availability of appraisal rights to GLG stockholders who
comply with all of the required procedures under Delaware law
for exercising appraisal rights, which allow such stockholders
to seek appraisal of the fair value of their stock as determined
by the Court of Chancery of the State of Delaware.
|
Man, Holdco and Merger Sub considered the historical and current
stock price of GLG and analyzed the value of GLG based on its
operation as a continuing business, and, to that extent, such
analyses could be characterized as forms of going concern
valuations. Man, Holdco and Merger Sub did not consider
GLGs net book value or liquidation value in their
evaluation of the fairness of the merger and the share exchange
to GLGs unaffiliated stockholders because Man, Holdco and
Merger Sub did not believe that GLGs net book value or
liquidation value were material or relevant to a determination
of the substantive fairness of the merger and the share
exchange. Man, Holdco and Merger Sub did not believe that
GLGs net book value was material to their conclusion
regarding the substantive fairness of the merger and the share
exchange because, in their view, net book value is not
indicative of GLGs market value since it is a purely
historical measurement of financial position in accordance with
U.S. generally accepted principles, or GAAP, and is not
forward-looking or wholly based on fair value. Man, Holdco and
Merger Sub did not consider the liquidation value of GLG because
of their belief that liquidation value does not present a
meaningful valuation for GLG and its business as GLGs
value is derived from cash flows generated from its continuing
operations rather than from the value of assets that might be
realized in a liquidation.
In making their determination as to the substantive fairness of
the merger and the share exchange to GLGs unaffiliated
stockholders, Man, Holdco and Merger Sub were not aware of any
firm offers during the prior two years by any person for the
merger or consolidation of GLG with another company, the sale or
transfer of all or substantially all of GLGs assets or a
purchase of GLGs assets that would enable the holder to
exercise control of GLG. Third party offers were therefore not
considered by Man, Holdco and Merger Sub in reaching their
conclusion as to fairness.
The foregoing discussion of the information and factors
considered and given weight by Man, Holdco and Merger Sub in
connection with the fairness of the merger and the share
exchange is not intended to be exhaustive, but is believed to
include all material factors considered by Man, Holdco and
Merger Sub. Man, Holdco and Merger Sub did not find it
practicable to assign, and did not assign, relative weights to
the individual factors considered in reaching its conclusion as
to the fairness of the merger and the share exchange. Rather,
their fairness determination was made after consideration of all
of the foregoing factors as a whole.
The
Principals
The Principals are making the statements included in this
section solely for the purposes of complying with the
requirements of
Rule 13e-3
and related rules under the Exchange Act. The views of the
Principals should not be construed as a recommendation to any
stockholder as to how that stockholder should vote on the
proposal to adopt the merger agreement and the merger.
While the Principals did not undertake an independent evaluation
of the merger or engage a financial advisor, in each case, for
the purpose of evaluating the fairness of the merger to GLG or
the GLG stockholders, the Individual Principals, in their
capacities as directors of GLG, participated in the
deliberations of the GLG Board regarding, and received advice
from the GLG Boards financial advisor as to the fairness
from a financial point of view to the holders (other than Man
and its affiliates) of shares of GLG common stock, FA Sub 2
exchangeable shares and convertible notes, of the Aggregate
Consideration to be paid pursuant to the share exchange
agreement and the merger agreement. The Principals adopted the
GLG Boards conclusion and analysis with respect to the
fairness of the merger and the share exchange, including the
factors discussed under Fairness of the Merger
and
60
Recommendations of the Special Committee and the GLG
Board The GLG Board, and believe that the
proposed merger and share exchange are substantively and
procedurally fair to GLGs stockholders including the
unaffiliated stockholders based on the factors considered by the
GLG Board, including the recommendation of the special committee
and the generally positive and favorable factors, as well as the
generally negative and unfavorable factors, and the factors
relating to procedural safeguards.
Financial
Analyses of the Financial Advisor to Man
Man retained Perella Weinberg to act as its lead financial
advisor in connection with the merger and the share exchange.
Man selected Perella Weinberg to act as its lead financial
advisor in connection with the merger and the share exchange
based on Perella Weinbergs qualifications, expertise and
reputation and its knowledge of the industries in which Man
conducts its business. Perella Weinberg, as part of its
investment banking business, is continually engaged in
performing financial analyses with respect to businesses and
their securities in connection with mergers and acquisitions,
leveraged buyouts and other transactions as well as for
corporate and other purposes.
On March 9, 2010, Perella Weinberg initially discussed
certain financial analyses with the Man Board. Perella Weinberg
then provided updates to the Man Board on April 26, 2010,
May 3, 2010 and May 13, 2010. References to the
March materials are to Perella Weinbergs
materials dated March 9, 2010. References to the
April analyses are to Perella Weinbergs
analyses presented to the Man Board on April 26, 2010 in
connection with the presentation made by the management of Man.
References to the May 3rd materials and
the May 13th materials are to Perella
Weinbergs materials dated May 3, 2010 and
May 13, 2010, respectively. References to the Man
board materials refer collectively to the March materials,
the April analyses, the May 3rd materials and the
May 13th materials. Copies of the March materials, the
May 3rd materials and the May 13th materials
are attached as exhibits to the
Schedule 13e-3,
will be made available for inspection and copying at the
principal executive offices of GLG during its regular business
hours by any interested holder of GLG common stock, and copies
may be obtained by requesting them in writing from GLG at the
address provided under the caption Where You Can Find More
Information below. The description of the analyses
performed by Perella Weinberg set forth below is qualified by
reference to the relevant Man board materials. The analyses
discussed are summarized below.
In preparing the Man board materials, Perella Weinberg, among
other things:
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reviewed certain publicly available financial statements and
other business and financial information with respect to Man and
GLG, including research analyst reports;
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reviewed certain publicly available financial forecasts relating
to Man and GLG;
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discussed the past and current business, operations, financial
condition and prospects of Man, including information relating
to certain strategic, financial and operational benefits
anticipated from the merger and the share exchange, with senior
executives of Man;
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reviewed the pro forma financial impact of, among other things,
the merger and the share exchange on the future financial
performance of Man, including the potential impact on Mans
estimated earnings per share and regulatory capital position;
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compared the financial performance of Man and GLG with that of
certain publicly-traded companies which it believed to be
generally relevant;
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reviewed the historical trading prices and trading activity for
shares of Man ordinary shares and GLG common stock, and compared
such price and trading activity of Man ordinary shares and
shares of GLG common stock with that of securities of certain
publicly-traded companies which it believed to be generally
relevant;
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reviewed drafts of the merger agreement and the share exchange
agreement; and
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conducted such other financial studies, analyses and
investigations, and considered such other factors, as it deemed
appropriate.
|
Perella Weinberg was not requested to, and did not, provide any
opinion as to the fairness of the merger and the share exchange
to Man or its shareholders, or to GLG or its stockholders. In
preparing the Man board materials, Perella Weinberg assumed and
relied upon, without independent verification, the accuracy and
completeness of the financial and other information reviewed by
or discussed with it and took into account the Man Boards
commercial assessment of the merger and the share exchange. In
preparing the Man board materials, Perella Weinberg did not make
any
61
independent valuation or appraisal of the assets or liabilities
(including any contingent, derivative or off-balance-sheet
assets and liabilities) of Man or GLG, nor was it furnished with
such valuations or appraisals. The Man board materials do not
address Mans underlying business decision to enter into
the merger and the share exchange or the relative merits of the
merger and the share exchange as compared with any other
strategic alternatives which may be available to Man. Perella
Weinberg provided its analysis for the information and
assistance of Man in connection with, and for the purposes of,
its evaluation of the merger and the share exchange.
The Man board materials were not intended to be and do not
constitute a recommendation to any holder of Man ordinary shares
or holder of shares of GLG common stock as to how to vote or
otherwise act with respect to the merger and the share exchange
or any other matter and do not in any manner address the prices
at which shares of GLG common stock or Man ordinary shares will
trade at any time. The Man board materials were necessarily
based on financial, economic, market and other conditions as in
effect on, and the information made available to Perella
Weinberg as of, the date of the March materials, the April
analyses, the May
3rd
materials
and/or the
May 13th
materials, as applicable.
The following is a brief summary of the material financial
analyses performed by Perella Weinberg and reviewed by the Man
Board and does not purport to be a complete description of the
financial analyses performed by Perella Weinberg. The order of
analyses described below does not represent the relative
importance or weight given to those analyses by Perella
Weinberg. Some of the summaries of the financial analyses
include information presented in tabular format. In order to
fully understand Perella Weinbergs financial analyses, the
tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the
financial analyses. Considering the data below without
considering the full narrative description of the financial
analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of
Perella Weinbergs financial analyses. The public market
trading price targets published by brokers are estimates of
future prices, do not necessarily reflect current market trading
prices for Man ordinary shares or GLG common stock, as
applicable, and are subject to numerous uncertainties, including
the future financial performance of Man or GLG, as applicable,
and future financial market conditions.
March
Materials
On March 9, 2010, Perella Weinberg initially discussed the
following financial analyses with the Man Board.
Man
Broker Price Targets Statistics
Perella Weinberg reviewed and analyzed recent public market
trading price targets for Man ordinary shares prepared and
published by selected brokers during the period from
January 7, 2010 through March 1, 2010. These targets
reflect each brokers estimate of the future public market
trading price of Man ordinary shares and are not discounted to
reflect present values. The price targets of the selected
brokers ranged from 300 pence to 390 pence.
Selected
Publicly Traded Companies Analysis
Perella Weinberg reviewed and compared certain financial
information, ratios and public market multiples for Man and GLG
to corresponding financial information, ratios and public market
multiples for the following publicly traded companies in the
alternative asset management industry which, in the exercise of
its professional judgment and based on its knowledge of such
industry, Perella Weinberg determined to be the major publicly
traded alternative asset managers pursuing primarily liquid
strategies:
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Och-Ziff Capital Management Group LLC
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Ashmore Group plc
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BlueBay Asset Management plc
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Perella Weinberg calculated and compared financial information,
ratios and public market multiples of Man, GLG and each of the
selected companies based on the closing price per share as of
March 3, 2010, publicly available information and
information Perella Weinberg obtained from company disclosure
for historical information and public forecasts for forecasted
information.
62
With respect to Man, GLG and each of the selected companies,
Perella Weinberg reviewed, among other things:
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enterprise value (EV) as a multiple of EBITDA for
the year ended March 31, 2009 and estimated EBITDA for the
years ending March 31, 2010 and 2011;
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price per share as a multiple of earnings per share
(EPS) for the year ended March 31, 2009 and
estimated EPS for the years ending March 31, 2010 and
2011; and
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EV as a multiple of assets under management (AUM).
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Such multiples are summarized in the following table:
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EV-to-EBITDA
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Price-to-EPS
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Company
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EV
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AUM
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Mar-09 A
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Mar-10 E
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Mar-11 E
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Mar-09 A
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Mar-10 E
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Mar-11 E
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EV/AUM
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(Millions)
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(Billions)
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Man
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$
|
4,333
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$
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42.4
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3.9x
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6.9x
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5.0x
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6.3x
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13.0x
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9.0x
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10.2
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%
|
Och-Ziff Capital Management
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$
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5,611
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$
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23.5
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14.5x
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10.4x
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8.5x
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18.1x
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13.5x
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12.4x
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23.9
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%
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Ashmore Group plc
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$
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2,362
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$
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31.6
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9.3x
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9.1x
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7.7x
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14.2x
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14.0x
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12.1x
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7.5
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%
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BlueBay Asset Management plc
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$
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1,025
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$
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34.3
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12.2x
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8.6x
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6.7x
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21.7x
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14.4x
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11.5x
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3.0
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%
|
GLG
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$
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1,285
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$
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22.2
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33.9x
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9.4x
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6.4x
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8.0x
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n/m
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|
12.9x
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5.8
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%
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Although the selected companies were used for comparison
purposes, no business of any selected company was either
identical or directly comparable to Mans business or
GLGs business.
Contribution
Analysis
Perella Weinberg analyzed the contribution of each of Man and
GLG to the pro forma combined company, not including any
synergies or other combination adjustments, with respect to each
companys AUM, market capitalization and EV and public
forecasts for each companys revenues, EBITDA and net
income for the years ending March 31, 2010, 2011 and 2012.
The analysis yielded the following results:
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Man
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GLG
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AUM
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66
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%
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34
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%
|
Market capitalization
|
|
|
88
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%
|
|
|
12
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%
|
EV
|
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|
77
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%
|
|
|
23
|
%
|
2010E Revenue
|
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|
79
|
%
|
|
|
21
|
%
|
2011E Revenue
|
|
|
77
|
%
|
|
|
23
|
%
|
2012E Revenue
|
|
|
76
|
%
|
|
|
24
|
%
|
2010E EBITDA
|
|
|
98
|
%
|
|
|
2
|
%
|
2011E EBITDA
|
|
|
89
|
%
|
|
|
11
|
%
|
2012E EBITDA
|
|
|
88
|
%
|
|
|
12
|
%
|
2010E Net Income
|
|
|
n/m*
|
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|
n/m*
|
|
2011E Net Income
|
|
|
91
|
%
|
|
|
9
|
%
|
2012E Net Income
|
|
|
88
|
%
|
|
|
12
|
%
|
|
|
|
* |
|
The net income forecast used for GLG for this time period was
negative. |
Pro Forma
Accretion/Dilution Analysis
Perella Weinberg reviewed the potential pro forma financial
effects of a 50% cash/50% equity transaction at no premium to
GLGs then-current share price, without taking into account
any potential synergies and assuming (i) GLGs
warrants were acquired for cash and (ii) annual pre-tax
lost interest from Mans on-balance sheet cash at a rate of
2%. Estimated financial data for Man and GLG were based on
public forecasts. This analysis indicated that such a
transaction could be 1.5% and 4.7% accretive to Mans
shareholders for the years ending March 31, 2011 and 2012,
respectively.
63
Perella Weinberg also performed a sensitivities analysis on the
accretion/dilution analysis assuming the transaction
consideration was at a premium of (10%) to 50% to the GLG common
stock price and the equity portion of the consideration was 0%
to 100%, which resulted in:
|
|
|
|
|
a range from 12.3% dilution assuming a 50% premium and 100%
equity consideration to 7.9% accretion assuming a (10%) premium
and 0% equity consideration for the year ending March 31,
2011; and
|
|
|
|
a range from 9.8% dilution assuming a 50% premium and 100%
equity consideration to 11.4% accretion assuming a (10%) premium
and 0% equity consideration for the year ending March 31,
2012.
|
The actual results achieved by the combined company may vary
from projected results and the variations may be material.
Other
Analyses
Perella Weinberg also reviewed and considered other factors,
including the relationship between movements in the prices of
Man ordinary shares and GLG common stock during the one-year
period ended March 3, 2010, including the daily ratio of
the closing price of Man ordinary shares to the closing price of
GLG common stock during such period.
April
Analyses
On April 26, 2010, in connection with a presentation made
by the management of Man to the Man Board, Perella Weinberg
presented new analyses relating to historical stock trading of
GLG, public market trading price targets of GLG, discounted cash
flow and potential synergies. Additionally, Perella Weinberg
updated portions of its financial analyses from the March
materials relating to the selected publicly traded companies and
pro forma accretion/dilution analyses, as described more fully
below. Perella Weinberg did not otherwise update the March
materials.
Historical
Stock Trading Analysis
Perella Weinberg noted that the 52-week trading range, as of
April 22, 2010, of GLG common stock was $2.28 to $4.52, the
one-week trading range for the week ended March 25, 2010
(the unaffected stock price date) was $2.68 to $2.81 and the
one-week trading range for the week ended April 22, 2010
was $3.14 to $3.39.
GLG
Broker Price Target Statistics
Perella Weinberg reviewed and analyzed recent public market
trading price targets for GLG common stock prepared and
published by selected brokers as of April 22, 2010. These
targets reflect each brokers estimate of the future public
market trading price of GLG common stock and are not discounted
to reflect present values. Perella Weinberg noted that the
undiscounted broker price target for shares of GLG common stock
from the core broker, Barclays Capital, was $3.00 and the range
of undiscounted broker price targets for shares of GLG common
stock was $3.00 to $4.00.
Selected
Publicly Traded Companies Analysis
Perella Weinberg updated the portion of its selected public
traded companies analysis from the March materials relating to
price per share as a multiple of estimated EPS for the year
ending March 31, 2011 based on market data as of
April 22, 2010, which yielded a range of 11.3x to 15.6x and
applied such multiples to the corresponding data of GLG which
resulted in an implied price per share of $2.39 to $3.30.
Discounted
Cash Flow Analysis
Perella Weinberg performed an illustrative discounted cash flow
analysis on GLG to calculate the estimated present value as of
April 22, 2010 of the estimated standalone cash flows to
equity holders, based on public forecasts. Perella Weinberg
discounted these cash flows at a 12.0% cost of equity based on
its estimates of the appropriate equity market premium, equity
market beta and risk free rate. Perella Weinberg used
(i) an equity
64
market premium equal to the expected market return for the
United States less the risk free rate for the United States
(both as obtained from Bloomberg); (ii) an equity market
beta equal to the average of the equity market betas for
Och-Ziff Capital Management Group LLC, Ashmore Group plc,
BlueBay Asset Management plc, Man and GLG (each as obtained from
Bloomberg); and (iii) a risk free rate equal to the risk
free rate for the United States (as obtained from Bloomberg). A
perpetuity growth rate of 2% was used, which was in line with
the then-current growth rate in the United States consumer price
index. Perella Weinberg chose these rates based on its
experience working with corporations on various merger and
acquisition transactions. This analysis indicated a reference
range of implied price per share of GLG common stock of
approximately $3.56 to $6.51.
Pro Forma
Accretion/Dilution Analysis
Perella Weinberg updated its accretion/dilution analysis from
the March materials, using Mans share price of £2.59
(as of April 23, 2010), the GLG common stock price of $2.68
(as of March 25, 2010, the unaffected stock price date) and
a GBP/USD exchange rate of 1.54 (as of April 23,
2010) and assuming $50 million in annual run-rate
synergies (assuming $25 million phased-in in
2011) without including the effects of implementation
costs. The analysis was performed under two scenarios:
1. the Selling Stockholders receiving equity consideration
at no premium and the other GLG stockholders receiving cash at a
premium of (10%) to 60% to the GLG common stock price with full
run-rate synergies of $0 to $50 million, which resulted in:
|
|
|
|
|
a range from 3.0% accretion assuming a 60% premium and $0 in
synergies to 7.4% accretion assuming a (10%) premium and
$50 million in synergies for the year ending March 31,
2011; and
|
|
|
|
a range from 5.6% accretion assuming a 60% premium and $0 in
synergies to 11.2% accretion assuming a (10%) premium and
$50 million in synergies for the year ending March 31,
2012; and
|
2. the Selling Stockholders receiving equity consideration
at a premium of (10%) to 50% and the other GLG stockholders
receiving cash at a premium of (10%) to 60%, which resulted in:
|
|
|
|
|
a range from 3.2% accretion assuming a 50% premium for the
Selling Stockholders and a 60% premium for the other GLG
stockholders to 8.0% accretion assuming a (10%) premium for both
the Selling Stockholders and the other GLG stockholders for the
year ending March 31, 2011; and
|
|
|
|
a range from 7.1% accretion assuming a 50% premium for the
Selling Stockholders and a 60% premium for the other GLG
stockholders to 11.9% accretion assuming a (10%) premium for
both the Selling Stockholders and the other GLG stockholders for
the year ending March 31, 2012.
|
The actual results achieved by the combined company may vary
from projected results and the variations may be material.
Synergies
Analysis
Perella Weinberg calculated the capitalized value of synergies
(after tax at a rate of 28%, the current UK marginal corporate
tax rate at such time) that might be achieved by Man in the
merger and the share exchange on both a total and on a per
ordinary share of Man basis assuming the Selling Stockholders
receive equity consideration at no premium, full run-rate
synergies of $0 to $50 million and synergies multiples ranging
from 10.0x to 14.0x, which resulted in total capitalized
synergies ranging from $0 to $504 million and per ordinary
share capitalized synergies ranging from $0 to $1.57 per share.
May
3rd
Materials
On May 3, 2010, Perella Weinberg discussed certain
financial analyses with the Man Board. Perella Weinberg
discussed a new analysis of various blended offer prices and
updated portions of its financial analyses from the March
materials and April analyses, as applicable, relating to the
selected publicly traded companies, pro forma accretion/dilution
and synergies analyses, as described more fully below. Perella
Weinberg did not otherwise update the March materials or the
April analyses.
65
Selected
Publicly Traded Companies Analysis
Perella Weinberg updated its selected publicly traded companies
analysis from the March materials and the April analyses to
reflect financial information as of April 30, 2010 and also
included the following additional new multiples with respect to
Man, GLG and each of the selected companies in the alternative
asset management industry:
|
|
|
|
|
EV as a multiple of estimated EBITDA for the year ending
March 31, 2012; and
|
|
|
|
price per share as a multiple of estimated EPS for the year
ending March 31, 2012.
|
Such updated and new multiples are summarized in the following
table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-to-EBITDA
|
|
Price-to-EPS
|
|
|
Company
|
|
EV
|
|
AUM
|
|
Mar-09A
|
|
Mar-10E
|
|
Mar-11E
|
|
Mar-12 E
|
|
Mar-09 A
|
|
Mar-10 E
|
|
Mar-11 E
|
|
Mar-12 E
|
|
EV/AUM
|
|
|
(Millions)
|
|
(Billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Man
|
|
$
|
4,556
|
|
|
$
|
39.1
|
|
|
|
4.1
|
x
|
|
|
8.6
|
x
|
|
|
6.8
|
x
|
|
|
5.0
|
x
|
|
|
6.5
|
x
|
|
|
14.2
|
x
|
|
|
11.3
|
x
|
|
|
8.0
|
x
|
|
|
11.7
|
%
|
Och-Ziff Capital
|
|
$
|
6,838
|
|
|
$
|
25.3
|
|
|
|
17.7
|
x
|
|
|
12.7
|
x
|
|
|
10.4
|
x
|
|
|
8.6
|
x
|
|
|
18.8
|
x
|
|
|
12.4
|
x
|
|
|
10.9
|
x
|
|
|
n.a
|
|
|
|
27.0
|
%
|
Management Group LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ashmore Group plc
|
|
$
|
2,625
|
|
|
$
|
33.0
|
|
|
|
9.8
|
x
|
|
|
9.5
|
x
|
|
|
8.3
|
x
|
|
|
7.1
|
x
|
|
|
14.3
|
x
|
|
|
14.1
|
x
|
|
|
12.3
|
x
|
|
|
10.8
|
x
|
|
|
8.0
|
%
|
BlueBay Asset
|
|
$
|
1,041
|
|
|
$
|
37.0
|
|
|
|
13.3
|
x
|
|
|
9.2
|
x
|
|
|
7.6
|
x
|
|
|
n.a
|
|
|
|
20.9
|
x
|
|
|
13.7
|
x
|
|
|
11.0
|
x
|
|
|
10.1
|
x
|
|
|
2.8
|
%
|
Management plc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GLG
|
|
$
|
1,449
|
|
|
$
|
22.2
|
|
|
|
10.3
|
x
|
|
|
n/m
|
|
|
|
13.2
|
x
|
|
|
9.2
|
x
|
|
|
9.6
|
x
|
|
|
n/m
|
|
|
|
15.5
|
x
|
|
|
9.4
|
x
|
|
|
6.5
|
%
|
In addition, Perella Weinberg noted the maximum, mean, median
and minimum of such multiples and ratios which are summarized in
the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-to-EBITDA
|
|
Price-to-EPS
|
|
|
|
|
Mar-09A
|
|
Mar-10E
|
|
Mar-11E
|
|
Mar-12 E
|
|
Mar-09 A
|
|
Mar-10 E
|
|
Mar-11 E
|
|
Mar-12 E
|
|
EV/AUM
|
|
Maximum
|
|
|
17.7
|
x
|
|
|
12.7
|
x
|
|
|
13.2
|
x
|
|
|
9.2
|
x
|
|
|
20.9
|
x
|
|
|
14.2
|
x
|
|
|
15.5
|
x
|
|
|
10.8
|
x
|
|
|
27.0
|
%
|
Mean
|
|
|
11.0
|
x
|
|
|
10.0
|
x
|
|
|
9.2
|
x
|
|
|
7.5
|
x
|
|
|
14.0
|
x
|
|
|
13.6
|
x
|
|
|
12.2
|
x
|
|
|
9.6
|
x
|
|
|
11.2
|
%
|
Median
|
|
|
10.3
|
x
|
|
|
9.4
|
x
|
|
|
8.3
|
x
|
|
|
7.9
|
x
|
|
|
14.3
|
x
|
|
|
13.9
|
x
|
|
|
11.3
|
x
|
|
|
9.8
|
x
|
|
|
8.0
|
%
|
Minimum
|
|
|
4.1
|
x
|
|
|
8.6
|
x
|
|
|
6.8
|
x
|
|
|
5.0
|
x
|
|
|
6.5
|
x
|
|
|
12.4
|
x
|
|
|
10.9
|
x
|
|
|
8.0
|
x
|
|
|
2.8
|
%
|
Perella Weinberg also reviewed and compared financial
information, ratios and public market multiples for the
following publicly traded companies in the traditional asset
management industry which, in the exercise of its professional
judgment and based on its knowledge of such industry, Perella
Weinberg determined to be the major stand-alone European-focused
long-only asset managers:
|
|
|
|
|
Invesco Ltd.
|
|
|
|
Schroders PLC
|
|
|
|
Aberdeen Asset Management PLC
|
|
|
|
Henderson Group plc
|
|
|
|
Gartmore Group Limited
|
|
|
|
F&C Asset Management PLC
|
With respect to each of the selected traditional asset
management industry companies, Perella Weinberg reviewed, among
other things:
|
|
|
|
|
EV as a multiple of estimated EBITDA for the years ending
December 31, 2010, 2011 and 2012;
|
|
|
|
price per share as a multiple of estimated EPS for the years
ending December 31, 2010, 2011 and 2012; and
|
|
|
|
EV as a multiple of AUM.
|
66
Such multiples and their means are summarized in the following
table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV-to-EBITDA
|
|
Price-to-EPS
|
|
|
Company
|
|
EV
|
|
AUM
|
|
Dec-10 E
|
|
Dec-11 E
|
|
Dec-12 E
|
|
Dec-10 E
|
|
Dec-11 E
|
|
Dec-12 E
|
|
EV/AUM
|
|
|
(Millions)
|
|
(Billions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invesco Ltd.
|
|
£
|
6,712
|
|
|
£
|
338
|
|
|
|
7.9
|
x
|
|
|
5.5
|
x
|
|
|
5.5
|
x
|
|
|
18.1
|
x
|
|
|
14.3
|
x
|
|
|
12.8
|
x
|
|
|
2.0
|
%
|
Schroders PLC
|
|
£
|
2,566
|
|
|
£
|
148
|
|
|
|
8.8
|
x
|
|
|
7.1
|
x
|
|
|
6.4
|
x
|
|
|
17.4
|
x
|
|
|
14.2
|
x
|
|
|
12.2
|
x
|
|
|
1.7
|
%
|
Aberdeen Asset
|
|
£
|
1,734
|
|
|
£
|
161
|
|
|
|
9.0
|
x
|
|
|
7.6
|
x
|
|
|
6.7
|
x
|
|
|
12.3
|
x
|
|
|
10.6
|
x
|
|
|
9.3
|
x
|
|
|
1.1
|
%
|
Management PLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henderson Group plc
|
|
£
|
1,285
|
|
|
£
|
58
|
|
|
|
11.8
|
x
|
|
|
10.3
|
x
|
|
|
9.3
|
x
|
|
|
15.4
|
x
|
|
|
13.3
|
x
|
|
|
11.6
|
x
|
|
|
2.2
|
%
|
Gartmore Group Limited
|
|
£
|
655
|
|
|
£
|
22
|
|
|
|
7.4
|
x
|
|
|
6.5
|
x
|
|
|
5.7
|
x
|
|
|
7.5
|
x
|
|
|
6.2
|
x
|
|
|
5.5
|
x
|
|
|
2.9
|
%
|
F&C Asset
|
|
£
|
446
|
|
|
£
|
106
|
|
|
|
6.1
|
x
|
|
|
5.5
|
x
|
|
|
5.7
|
x
|
|
|
9.6
|
x
|
|
|
7.9
|
x
|
|
|
7.2
|
x
|
|
|
0.4
|
%
|
Management PLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mean
|
|
|
|
|
|
|
|
|
|
|
8.5
|
x
|
|
|
7.1
|
x
|
|
|
6.5
|
x
|
|
|
13.4
|
x
|
|
|
11.1
|
x
|
|
|
9.8
|
x
|
|
|
1.7
|
%
|
As previously noted, although the selected companies were used
for comparison purposes, no business of any selected company was
either identical or directly comparable to Mans business
or GLGs business.
Pro Forma
Accretion/Dilution Analysis
Perella Weinberg updated its accretion/dilution analysis from
the April analyses based on data as of April 30, 2010. This
analysis was performed under three different scenarios:
1. equity consideration of $3.60 per share for the Selling
Stockholders and cash consideration of $4.02 per share for the
other GLG shareholders, which resulted in a blended offer price
of $3.86 and accretion of 5.02% and 9.05% for the years ending
March 31, 2011 and 2012, respectively;
2. equity consideration of $3.50 per share for the Selling
Stockholders and cash consideration of $4.50 per share for the
other GLG shareholders, which resulted in a blended offer price
of $4.14 and accretion of 4.99% and 9.11% for the years ending
March 31, 2011 and 2012, respectively; and
3. equity consideration of $3.75 per share for the Selling
Stockholders and cash consideration of $4.50 per share for the
other GLG shareholders, which resulted in a blended offer price
of $4.22 and accretion of 4.38% and 8.47% for the years ending
March 31, 2011 and 2012, respectively.
The actual results achieved by the combined company may vary
from projected results and the variations may be material.
Synergies
Analysis
Perella Weinberg updated its synergies analysis from the April
analyses to include an illustrative analysis of full run-rate
synergies of up to $100 million, which resulted in total
capitalized synergies ranging from $0 to $1,008 million and
per share capitalized synergies ranging from $0 to $2.59 per Man
ordinary share. This analysis was for illustrative purposes only
and did not represent Perella Weinbergs or anyone
elses view of what synergies could be obtained in
connection with the merger and the share exchange.
Analysis
at Various Blended Offer Prices (AVP
analysis)
Perella Weinberg also performed an AVP analysis, which produces
the multiples that would result from a range of offer prices,
based on the number of shares of GLG common stock outstanding on
April 30, 2010, the impact of GLGs convertible notes
and a blended offer price ranging from $3.24 to $5.00 per share
of GLG common stock, which resulted in:
|
|
|
|
|
price to estimated EPS multiples (excluding synergies) of 15.4x
to 23.3x for the year ending March 31, 2011 and 9.8x to
14.9x for the year ending March 31, 2012; and
|
67
|
|
|
|
|
price to estimated EPS multiples (including $25 million in
pre-tax synergies in 2011 and $50 million in pre-tax
synergies in 2012) of 12.4x to 18.7x for the year ending
March 31, 2011 and 7.5x to 11.3x for the year ending
March 31, 2012.
|
May
13th Materials
On May 13, 2010, Perella Weinberg discussed certain
financial analyses with the Man Board. Perella Weinberg updated
portions of its financial analyses from the May
3rd
materials relating to the pro forma accretion/dilution and
synergies analyses, as described more fully below. Perella
Weinberg did not otherwise update the May
3rd
materials.
Pro Forma
Accretion/Dilution Analysis
Perella Weinberg updated its accretion/dilution analysis from
the May
3rd
materials based on data as of May 12, 2010. This analysis
was performed under three different scenarios:
1. equity consideration of $3.25 per share for the Selling
Stockholders and cash consideration of $4.25 per share for the
other GLG shareholders, which resulted in a blended offer price
of $3.85 and accretion of 8.62% and 11.26% for the years ending
March 31, 2011 and 2012, respectively;
2. equity consideration of $3.50 per share for the Selling
Stockholders and cash consideration of $4.50 per share for the
other GLG shareholders, which resulted in a blended offer price
of $4.10 and accretion of 7.80% and 10.51% for the years ending
March 31, 2011 and 2012, respectively; and
3. equity consideration of $3.75 per share for the Selling
Stockholders and cash consideration of $4.50 per share for the
other GLG shareholders, which resulted in a blended offer price
of $4.20 and accretion of 7.14% and 9.88% for the years ending
March 31, 2011 and 2012, respectively.
The actual results achieved by the combined company may vary
from projected results and the variations may be material.
Synergies
Analysis
Perella Weinberg updated its synergies analysis from the May
3rd
materials to include synergies multiples ranging from 9.0x to
11.0x, which resulted in total capitalized synergies ranging
from $0 to $792 million and per share capitalized synergies
ranging from $0 to $2.10 per ordinary share.
Miscellaneous
The preceding discussion is a summary of the material financial
analyses furnished by Perella Weinberg to the Man Board, but it
does not purport to be a complete description of the analyses
performed by Perella Weinberg or of its presentations to the Man
Board. The preparation of financial analyses is a complex
process and is not necessarily susceptible to partial analysis
or summary description. Selecting portions of the analyses or of
the summary set forth herein, without considering the analyses
or the summary as a whole, could create an incomplete view of
the processes underlying Perella Weinbergs financial
analyses. No company or transaction used in the analyses
described herein as a comparison is directly comparable to Man,
GLG or the merger and the share exchange.
Perella Weinberg prepared the analyses described herein solely
for purposes of analyzing the merger and the share exchange and
they were provided to the Man Board in that connection. These
analyses do not purport to be appraisals or a fairness opinion
nor do they necessarily reflect the prices at which businesses
or securities actually may be sold. Perella Weinbergs
analyses were based in part upon public forecasts, which are not
necessarily indicative of actual future results, and which may
be significantly more or less favorable than suggested by
Perella Weinbergs analyses. Because these analyses are
inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties to the
merger agreement and the exchange agreement or their respective
advisors, none of Man, Perella Weinberg or any other person
assumes responsibility if future results are materially
different from those forecasted.
68
As described above, the financial analyses provided by Perella
Weinberg to the Man Board were one of many factors taken into
consideration by the Man Board in making its determination to
approve the merger and the share exchange. Perella Weinberg was
not asked to, and did not, recommend the specific merger
consideration provided for in the merger or the specific
exchange ratio provided for in the share exchange, which merger
consideration and exchange ratio were determined through
negotiations between Man, on the one hand, and the special
committee and the Principals, on the other hand.
Man has agreed to pay Perella Weinberg a fee of
(i) $2 million payable on the date that Man announced
the merger and the share exchange and (ii) $8 million
payable promptly upon the closing of the merger and the share
exchange. In addition, Man agreed to reimburse Perella Weinberg
for its reasonable expenses, including attorneys fees and
disbursements and to indemnify Perella Weinberg and related
persons against various liabilities. Prior to the engagement of
Perella Weinberg with respect to the GLG transaction, Man has
engaged Perella Weinberg to provide financial advisory services
with respect to its acquisition strategy, as well as for
corporate and other purposes, from time to time.
In the ordinary course of its business activities, Perella
Weinberg or its affiliates may at any time hold long or short
positions, and may trade or otherwise effect transactions, for
its own account or the accounts of customers, in debt or equity
or other securities (or related derivative securities) or
financial instruments (including bank loans or other
obligations) of Man or GLG or any of their respective
affiliates. Perella Weinberg and its affiliates have in the past
provided, currently are providing, and in the future may
provide, investment banking and other financial services to Man
and GLG and their respective affiliates for which they have
received, or would expect to receive, compensation, including
£75,000 in November 2008 with respect to analysis and
advisory services provided to Man regarding its strategic
alternatives. Perella Weinberg also advised GLG with respect to
its reverse acquisition transaction with Freedom Acquisition
Holdings, Inc. in 2007. In addition, one of the founding
partners of Perella Weinberg served on the board of GLG from
November 2007 until May 2009.
Plans for
GLG After the Merger
If the merger is completed, Merger Sub will be merged with and
into GLG and GLG will continue as the surviving corporation.
Following such completion, it is currently expected that the
operations of GLG will be conducted substantially as they
currently are being conducted, except that: (i) GLG will
cease to have publicly traded equity securities and will instead
be a wholly owned subsidiary of Holdco and, indirectly, a wholly
owned subsidiary of Man; (ii) certain functions of GLG and
Man will be integrated following the completion of the merger,
including, without limitation, compliance and risk management,
operations, as well as product structuring, client services,
distribution and relationship management; and (iii) it may
be necessary to repay in full certain indebtedness of GLG in
connection with the closing of the merger and the share exchange.
On completion of the merger or shortly thereafter, Holdco
expects to transfer 100% of the equity in the surviving
corporation to Man.
Except as otherwise described in this proxy statement, Man has
informed us that it has no current plans or proposals and is
engaged in no negotiations that relate to or would result in: an
extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving GLG or any of its
subsidiaries; a purchase, sale or transfer of a material amount
of assets of GLG or any of its subsidiaries; a material change
in GLGs present dividend rate or policy, indebtedness or
capitalization; a change in the composition of the board of
directors or management of GLG; or any other material change in
GLGs corporate structure or business. Man may initiate
from time to time reviews of GLGs assets, corporate
structure, capitalization, operations, properties, management
and personnel to determine what changes, if any, would be
desirable following the consummation of the merger. Man
expressly reserves the right to make any changes it deems
appropriate in light of such evaluation and review or in light
of future developments.
Man announced on August 24, 2010 that Luke Ellis,
non-executive chairman of GLGs Multi-Manager business and
manager of the GLG Multi-Strategy Fund, will assume the role of
Head of Mans Multi-Manager business when the proposed
acquisition either closes or terminates.
69
Man announced on September 1, 2010 that Emmanuel Roman will
assume the newly created role of Mans Chief Operating
Officer following the consummation of the merger.
Financing
of the Merger
Mans obligations to complete the merger are not
conditioned upon its ability to obtain financing for the merger.
Man estimates that the total amount of cash funds necessary to
complete the proposed merger and related transactions is
approximately $1 billion. The cash consideration payable to
GLGs stockholders pursuant to the terms of the merger
agreement, together with fees and expenses associated with the
merger and related transactions, will be funded from Mans
existing cash resources. Based on the exchange ratio on the date
of signing and announcement of the merger agreement and share
exchange agreement, Man will issue to the Selling Stockholders
approximately 163 million ordinary shares in aggregate
(representing approximately 9 percent of the fully diluted
share capital of Man as enlarged by the merger and share
exchange). The number of Man ordinary shares to be issued in
connection with the share exchange stated in this proxy
statement has been determined by applying the exchange ratio of
1.0856 ordinary shares of Man per share of GLG common stock
exchanged by the Selling Stockholders. The number of Man
ordinary shares to be issued at the closing of the share
exchange may be lower than that stated in this proxy statement.
This is a result of the fact that the Selling Stockholders will
receive an amount of Man ordinary shares for each of their
shares of GLG common stock subject to the share exchange by
applying the exchange ratio determined at closing of the share
exchange. In the event that the implied value of a share of GLG
common stock subject to the share exchange would exceed $4.25
under the share exchange (applying the exchange ratio of 1.0856)
at closing of the share exchange, the number of Man ordinary
shares issued in respect of each share of GLG common stock
subject to the share exchange will be reduced to maintain a
maximum implied value of $4.25 per share of GLG common stock
subject to the share exchange at closing.
Certain
Forward-Looking Financial Information
GLG does not, as a matter of course, publicly disclose financial
projections as to future financial performance, earnings or
other results and is especially cautious of making financial
forecasts for extended periods because of the unpredictability
of the underlying assumptions and estimates. However, our
management does regularly provide to the GLG Board revenue and
expense forecasts using sensitivity analyses applying various
gross performance and net performance scenarios and assuming
certain AUM growth rates and compensation expense to revenue
ratios.
The inclusion of the information described below under
Sensitivity Analyses and
Projections and Research Analysts
Estimates should not be regarded as an indication that the
GLG Board, the special committee, their respective advisors or
any other person considered, or now considers, such sensitivity
analyses or projections to be material or to be a reliable
prediction of actual future results. Our managements
internal financial analyses are subjective in many respects.
There can be no assurance that these scenarios will be realized
or that actual results will not be significantly higher or lower
than shown. As a result, the inclusion of the sensitivity
analyses or projections in this proxy statement should not be
relied on as necessarily predictive of actual future events.
In addition, the sensitivity analyses were prepared solely for
internal use in assessing strategic direction and other
management decisions and not with a view toward public
disclosure or toward complying with generally accepted
accounting principles, which we refer to as GAAP, the published
guidelines of the SEC regarding projections and the use of
non-GAAP measures or the guidelines established by the American
Institute of Certified Public Accountants for preparation and
presentation of prospective financial information.
The sensitivity analyses and projections included below are the
responsibility of our management. Neither our independent
registered public accounting firm, nor any other independent
registered public accounting firm, has compiled, examined or
performed any procedures with respect to the financial
information contained herein, nor expressed any opinion or any
other form of assurance on such information or its
achievability. The report of the independent registered public
accounting firm, which is incorporated by reference in this
proxy statement, relates to GLGs historical financial
information. It does not extend to the sensitivity analyses or
projections described below and should not be read to do so.
70
These sensitivity analyses and projections were based on
numerous variables and assumptions that are inherently uncertain
and may be beyond the control of GLG. Important factors that may
affect actual results and cause these financial scenarios to not
be achieved include, but are not limited to, risks and
uncertainties relating to GLGs business (including with
respect to inflows, performance, compensation rates and fee
rates over the applicable periods), industry performance,
general business and economic conditions and other factors
described under Special Note Regarding Forward-Looking
Statements. In addition, the sensitivity analyses and
projections do not reflect revised prospects for GLGs
business, changes in general business or economic conditions, or
any other transaction or event that has occurred or that may
occur and that was not anticipated at the time the sensitivity
analyses and projections were prepared. Accordingly, there can
be no assurance that these scenarios will be realized or that
GLGs future financial results will not materially vary
from these scenarios.
No one has made or makes any representation to any stockholder
or anyone else regarding the information included in the
sensitivity analyses and projections set forth below. Readers of
this proxy statement are cautioned not to rely on this
forward-looking financial information. We have not updated and
do not intend to update, or otherwise revise the sensitivity
analyses or projections to reflect circumstances existing after
the date when made or to reflect the occurrence of future
events, even in the event that any or all of the assumptions are
shown to be in error. GLG has made no representation to Man,
Merger Sub or any other person in the merger agreement or
otherwise, concerning these sensitivity analyses or projections.
The sensitivity analyses and projections may be forward-looking
statements. For information on factors that may cause GLGs
future financial results to materially vary, see Special
Note Regarding Forward-Looking Statements.
Sensitivity
Analyses
The following is a summary of the 2010 sensitivity analyses
prepared by GLGs management and initially presented to the
GLG board on February 8, 2010 as part of a regularly
prepared package of board materials independent of any potential
transaction. These sensitivity analyses are for four gross
performance and net performance scenarios, in each case assuming
either 10% or 20% AUM growth and a 55% compensation expense to
revenue ratio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM Growth
|
|
|
10%
|
|
20%
|
SCENARIO
|
|
1
|
|
2
|
|
3
|
|
4
|
|
1
|
|
2
|
|
3
|
|
4
|
|
|
($ in millions)
|
|
Gross Performance
|
|
|
20
|
%
|
|
|
15
|
%
|
|
|
10
|
%
|
|
|
0
|
%
|
|
|
20
|
%
|
|
|
15
|
%
|
|
|
10
|
%
|
|
|
0
|
%
|
Net Performance
|
|
|
17
|
%
|
|
|
13
|
%
|
|
|
8
|
%
|
|
|
(1
|
)%
|
|
|
18
|
%
|
|
|
13
|
%
|
|
|
8
|
%
|
|
|
(1
|
)%
|
Opening Net AUM
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
|
$
|
22,284
|
|
Net Inflows
|
|
|
1,801
|
|
|
|
1,759
|
|
|
|
1,717
|
|
|
|
1,627
|
|
|
|
3,821
|
|
|
|
3,736
|
|
|
|
3,647
|
|
|
|
3,467
|
|
Net Performance
|
|
|
3,832
|
|
|
|
2,815
|
|
|
|
1,790
|
|
|
|
(280
|
)
|
|
|
3,986
|
|
|
|
2,926
|
|
|
|
1,860
|
|
|
|
(292
|
)
|
Closing Net AUM
|
|
|
27,917
|
|
|
|
26,858
|
|
|
|
25,791
|
|
|
|
23,631
|
|
|
|
30,091
|
|
|
|
28,946
|
|
|
|
27,791
|
|
|
|
25,459
|
|
Average Net AUM
|
|
|
24,931
|
|
|
|
24,437
|
|
|
|
23,932
|
|
|
|
22,893
|
|
|
|
25,849
|
|
|
|
25,328
|
|
|
|
24,798
|
|
|
|
23,704
|
|
EBITDA
|
|
$
|
95.8
|
|
|
$
|
68.5
|
|
|
$
|
43.8
|
|
|
$
|
2.4
|
|
|
$
|
106.3
|
|
|
$
|
77.4
|
|
|
$
|
50.7
|
|
|
$
|
6.1
|
|
Non-GAAP Adjusted Net Income
|
|
|
59.5
|
|
|
|
38.4
|
|
|
|
19.4
|
|
|
|
(12.5
|
)
|
|
|
67.6
|
|
|
|
45.3
|
|
|
|
24.7
|
|
|
|
(9.6
|
)
|
Adjusted Non-GAAP Adjusted Net Income
|
|
|
70.9
|
|
|
|
49.8
|
|
|
|
30.8
|
|
|
|
(12.5
|
)
|
|
|
79
|
|
|
|
56.7
|
|
|
|
36.2
|
|
|
|
(9.6
|
)
|
Adjusted EPS
|
|
|
0.19
|
|
|
|
0.13
|
|
|
|
0.08
|
|
|
|
(0.04
|
)
|
|
|
0.21
|
|
|
|
0.15
|
|
|
|
0.1
|
|
|
|
(0.03
|
)
|
Key Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management & Administration Fee Yield
|
|
|
0.86
|
%
|
|
|
0.86
|
%
|
|
|
0.86
|
%
|
|
|
0.87
|
%
|
|
|
0.86
|
%
|
|
|
0.86
|
%
|
|
|
0.86
|
%
|
|
|
0.87
|
%
|
Compensation Ratio
|
|
|
55
|
%
|
|
|
55
|
%
|
|
|
55
|
%
|
|
|
55
|
%
|
|
|
55
|
%
|
|
|
55
|
%
|
|
|
55
|
%
|
|
|
55
|
%
|
71
GLGs management provided to the GLG Board a 2010 summary
that was derived from a base case scenario. The
base case scenario expanded scenario #2 in the
table above, assuming 20% AUM growth and 55% compensation
expenses to revenue ratio, into quarterly amounts for 2010, as
set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
FY
|
|
|
($ in millions)
|
|
Opening AUM
|
|
$
|
22,284
|
|
|
$
|
23,535
|
|
|
$
|
25,201
|
|
|
$
|
26,962
|
|
|
$
|
22,284
|
|
Net Inflows
|
|
|
596
|
|
|
|
962
|
|
|
|
1,007
|
|
|
|
1,171
|
|
|
|
3,736
|
|
Net Performance
|
|
|
655
|
|
|
|
704
|
|
|
|
755
|
|
|
|
812
|
|
|
|
2,926
|
|
FX
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Closing Net AUM
|
|
|
23,535
|
|
|
|
25,201
|
|
|
|
26,962
|
|
|
|
28,945
|
|
|
|
28,946
|
|
Average Net AUM
|
|
|
22,910
|
|
|
|
24,368
|
|
|
|
26,082
|
|
|
|
27,954
|
|
|
|
25,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
FY
|
|
|
($ in thousands)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management & Administration Fees
|
|
$
|
49,147
|
|
|
$
|
52,546
|
|
|
$
|
56,025
|
|
|
$
|
59,829
|
|
|
$
|
217,547
|
|
Performance Fees
|
|
|
2,000
|
|
|
|
71,526
|
|
|
|
2,000
|
|
|
|
100,642
|
|
|
|
176,168
|
|
Other Revenues
|
|
|
750
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
3,750
|
|
Total Revenues
|
|
|
51,897
|
|
|
|
125,072
|
|
|
|
59,025
|
|
|
|
161,471
|
|
|
|
397,465
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation(1)
|
|
|
(33,737
|
)
|
|
|
(65,411
|
)
|
|
|
(38,308
|
)
|
|
|
(81,149
|
)
|
|
|
(218,606
|
)
|
G&A
|
|
|
(25,261
|
)
|
|
|
(25,444
|
)
|
|
|
(25,354
|
)
|
|
|
(25,357
|
)
|
|
|
(101,416
|
)
|
Total Expenses
|
|
|
(58,998
|
)
|
|
|
(90,855
|
)
|
|
|
(63,662
|
)
|
|
|
(106,506
|
)
|
|
|
(320,022
|
)
|
EBITDA
|
|
|
(7,101
|
)
|
|
|
34,217
|
|
|
|
(4,637
|
)
|
|
|
54,965
|
|
|
|
77,443
|
|
Depreciation
|
|
|
(1,125
|
)
|
|
|
(1,125
|
)
|
|
|
(1,125
|
)
|
|
|
(1,125
|
)
|
|
|
(4,500
|
)
|
Net Interest Expense
|
|
|
(3,486
|
)
|
|
|
(3,502
|
)
|
|
|
(3,539
|
)
|
|
|
(3,555
|
)
|
|
|
(14,082
|
)
|
Profit before tax
|
|
|
(11,712
|
)
|
|
|
29,590
|
|
|
|
(9,301
|
)
|
|
|
50,285
|
|
|
|
58,861
|
|
Effective taxes
|
|
|
1,523
|
|
|
|
(6,806
|
)
|
|
|
1,209
|
|
|
|
(9,463
|
)
|
|
|
(13,537
|
)
|
Non-GAAP Adjusted Net Income
|
|
|
(10,189
|
)
|
|
|
22,784
|
|
|
|
(8,092
|
)
|
|
|
40,822
|
|
|
|
45,324
|
|
Convertible Debt finance charge
|
|
|
|
|
|
|
2,856
|
|
|
|
|
|
|
|
2,856
|
|
|
|
11,425
|
|
Adjusted Non-GAAP Adjusted Net
|
|
|
(10,189
|
)
|
|
|
25,640
|
|
|
|
(8,092
|
)
|
|
|
43,678
|
|
|
|
56,749
|
|
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
FY
|
|
Key Financial Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted shares (in thousands
|
|
|
310,000
|
|
|
|
370,000
|
|
|
|
310,000
|
|
|
|
370,000
|
|
|
|
370,000
|
|
EPS(2)
|
|
$
|
(0.03
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.12
|
|
|
$
|
0.15
|
|
Management & Administration fee yield
|
|
|
0.87
|
%
|
|
|
0.86
|
%
|
|
|
0.85
|
%
|
|
|
0.85
|
%
|
|
|
0.86
|
%
|
Compensation ratio
|
|
|
65
|
%
|
|
|
52
|
%
|
|
|
65
|
%
|
|
|
50
|
%
|
|
|
55
|
%
|
Effective tax rate
|
|
|
13.0
|
%
|
|
|
23.0
|
%
|
|
|
13.0
|
%
|
|
|
18.8
|
%
|
|
|
23.0
|
%
|
|
|
|
(1) |
|
Excludes Acquisition-related compensation expense. |
|
(2) |
|
Estimated average diluted share count for Q2, Q4 and full year
2010 includes shares associated with the convertible notes
however average diluted share count for Q1 and Q3 excludes the
shares associated with the convertible notes as including them
would have an anti-dilutive effect during the period. |
Following the completion of the first fiscal quarter of 2010, on
May 3, 2010 GLGs management provided to the GLG Board
an updated base case scenario from the
February 8, 2010 presentation, reflecting actual first
72
quarter results and assuming a 58% (instead of 55%) compensation
expense to revenue ratio for the remainder of the fiscal year,
which is set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
Q1 Actual
|
|
|
Q2 (E)
|
|
|
Q3 (E)
|
|
|
Q4 (E)
|
|
|
FY (E)
|
|
|
|
($ in millions)
|
|
|
Opening AUM
|
|
$
|
22 175
|
|
|
$
|
23,667
|
|
|
$
|
25,078
|
|
|
$
|
26,660
|
|
|
$
|
22,175
|
|
Net Inflows
|
|
|
953
|
|
|
|
786
|
|
|
|
918
|
|
|
|
1,065
|
|
|
|
3,722
|
|
Net Performance
|
|
|
1,292
|
|
|
|
625
|
|
|
|
664
|
|
|
|
702
|
|
|
|
3,283
|
|
FX
|
|
|
(753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(753
|
)
|
Closing Net AUM
|
|
|
23,667
|
|
|
|
25,078
|
|
|
|
26,660
|
|
|
|
28,427
|
|
|
|
28,427
|
|
Average New AUM
|
|
|
22,921
|
|
|
|
24,373
|
|
|
|
25,869
|
|
|
|
27,544
|
|
|
|
25,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 Actual
|
|
|
Q2 (E)
|
|
|
Q3 (E)
|
|
|
Q4 (E)
|
|
|
FY (E)
|
|
|
|
($ in thousands)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management & Administration Fees
|
|
$
|
50,021
|
|
|
$
|
54,000
|
|
|
$
|
57,000
|
|
|
$
|
61,000
|
|
|
$
|
222,021
|
|
Performance Fees
|
|
|
2,717
|
|
|
|
75,000
|
|
|
|
1,000
|
|
|
|
100,000
|
|
|
|
178,717
|
|
Other Revenues
|
|
|
982
|
|
|
|
500
|
|
|
|
500
|
|
|
|
500
|
|
|
|
2,482
|
|
Total Revenues
|
|
|
53,720
|
|
|
|
129,500
|
|
|
|
58,500
|
|
|
|
161,500
|
|
|
|
403,220
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation(1)
|
|
|
(34,933
|
)
|
|
|
(73,000
|
)
|
|
|
(38,000
|
)
|
|
|
(86,000
|
)
|
|
|
(231,933
|
)
|
General and administrative costs
|
|
|
(23,101
|
)
|
|
|
(24,500
|
)
|
|
|
(24,750
|
)
|
|
|
(25,500
|
)
|
|
|
(97,851
|
)
|
Sublease Exceptional Expense
|
|
|
(4,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,092
|
)
|
Fair value movement in trading securities
|
|
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
477
|
|
Total Expenses
|
|
|
(61,649
|
)
|
|
|
(97,500
|
)
|
|
|
(62,750
|
)
|
|
|
(111,500
|
)
|
|
|
(333,399
|
)
|
EBITDA
|
|
|
(7,929
|
)
|
|
|
32,000
|
|
|
|
(4,250
|
)
|
|
|
50,000
|
|
|
|
69,821
|
|
Depreciation
|
|
|
(886
|
)
|
|
|
(1,125
|
)
|
|
|
(1,125
|
)
|
|
|
(1,125
|
)
|
|
|
(4,261
|
)
|
Net Interest Expense
|
|
|
(3,046
|
)
|
|
|
(3,500
|
)
|
|
|
(3,500
|
)
|
|
|
(3,600
|
)
|
|
|
(13,646
|
)
|
Profit before tax
|
|
|
(11,861
|
)
|
|
|
27,375
|
|
|
|
(8,875
|
)
|
|
|
45,275
|
|
|
|
51,914
|
|
Effective taxes
|
|
|
8,807
|
|
|
|
(6,296
|
)
|
|
|
1,154
|
|
|
|
(9,055
|
)
|
|
|
(5,390
|
)
|
Non-GAAP Adjusted Net Income
|
|
|
(3,054
|
)
|
|
|
21,079
|
|
|
|
(7,721
|
)
|
|
|
36,220
|
|
|
|
46,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 Actual
|
|
|
Q2 (E)
|
|
|
Q3 (E)
|
|
|
Q4 (E)
|
|
|
FY (E)
|
|
|
Key Financial Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted shares (in thousands)
|
|
|
305,000
|
|
|
|
370,000
|
|
|
|
305,000
|
|
|
|
370,000
|
|
|
|
370,000
|
|
EPS(2)
|
|
$
|
(0.01
|
)
|
|
$
|
0.06
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.11
|
|
|
$
|
0.16
|
|
Management & Administration fee yield
|
|
|
0.87
|
%
|
|
|
0.89
|
%
|
|
|
0.88
|
%
|
|
|
0.89
|
%
|
|
|
0.88
|
%
|
Compensation ratio
|
|
|
65
|
%
|
|
|
56
|
%
|
|
|
65
|
%
|
|
|
53
|
%
|
|
|
58
|
%
|
Effective tax rate
|
|
|
74.3
|
%
|
|
|
23.0
|
%
|
|
|
13.0
|
%
|
|
|
20.0
|
%
|
|
|
10.4
|
%
|
|
|
|
(1) |
|
Excludes Acquisition-related compensation expense. |
|
(2) |
|
Estimated average diluted share count for Q2, Q4 and full year
2010 includes shares associated with the convertible notes
however average diluted share count for Q1 and Q3 excludes the
shares associated with the convertible notes as including them
would have an anti-dilutive effect during the period. |
Projections
and Research Analysts Estimates
For purposes of the financial advisors analyses and
opinions, GLG management preliminarily advised each of Moelis
and Goldman Sachs to use the average of publicly available
research analysts estimates for GLG for 2010 and 2011.
73
Moelis. For purposes of its analysis and
opinion, Moelis was directed by the special committee to use the
average of the Wall Street analysts estimates for 2010 and
2011 with projected interest and tax assumptions provided by
management of GLG, as set forth below:
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts)
|
|
2010E
|
|
|
2011E
|
|
|
Revenues
|
|
$
|
413
|
|
|
$
|
536
|
|
Expenses
|
|
|
(326
|
)
|
|
|
(374
|
)
|
Cost/Income Ratio
|
|
|
78.8
|
%
|
|
|
69.8
|
%
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
88
|
|
|
$
|
162
|
|
Depreciation & Amortization
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
Interest Expense
|
|
|
(14
|
)
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
EBT
|
|
$
|
70
|
|
|
$
|
137
|
|
Income Tax
|
|
|
(7
|
)
|
|
|
(34
|
)
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
63
|
|
|
$
|
102
|
|
Shares Outstanding, Fully diluted
|
|
|
372
|
|
|
|
372
|
|
EPS, Fully Diluted
|
|
$
|
0.19
|
|
|
$
|
0.30
|
|
Goldman Sachs. For the purposes of Goldman
Sachs analysis and opinion, management of GLG adopted the
following estimates as management projections and confirmed the
use of these estimates for purposes of Goldman Sachs
fairness opinion:
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts)
|
|
2010E
|
|
|
2011E
|
|
|
Revenues
|
|
$
|
406
|
|
|
$
|
536
|
|
Expenses
|
|
|
(322
|
)
|
|
|
(378
|
)
|
Cost/Income Ratio
|
|
|
79
|
%
|
|
|
71
|
%
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
84
|
|
|
$
|
158
|
|
|
|
|
|
|
|
|
|
|
Depreciation & Amortization
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
Interest Expense
|
|
|
(14
|
)
|
|
|
(21
|
)
|
ow/ Convertible Interest Expense
|
|
|
(11
|
)
|
|
|
(11
|
)
|
Profit Before Tax
|
|
|
66
|
|
|
|
133
|
|
Tax Expense
|
|
|
(6
|
)
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
60
|
|
|
$
|
100
|
|
Net Income (As Converted)
|
|
|
68
|
|
|
|
108
|
|
|
|
|
|
|
|
|
|
|
Basic Number of Shares
|
|
|
310.1
|
|
|
|
310.1
|
|
Basic EPS
|
|
$
|
0.19
|
|
|
$
|
0.32
|
|
Fully Diluted Number of Shares (As Converted)
|
|
|
371.6
|
|
|
|
371.6
|
|
Fully Diluted EPS (As Converted)
|
|
$
|
0.18
|
|
|
$
|
0.29
|
|
Interests
of Certain Persons in the Merger
In considering the recommendations of the special committee and
our board of directors with respect to the merger agreement, you
should be aware that some of our directors and executive
officers have interests in the merger that are different from,
or in addition to, the interests of our stockholders generally,
as more fully described below. The special committee and our
board of directors were aware of these interests and considered
them, among other matters, in reaching their decision to approve
or recommend approval of the merger agreement (as the case may
be) and recommend that GLGs stockholders vote in favor of
the Merger Proposal.
74
Share
Exchange Agreement
Under the share exchange agreement, the Selling Stockholders
agreed with Man to exchange all of their shares (subject to
certain exceptions) of (a) our common stock, (b) our
Series A voting preferred stock, (c) our subsidiary FA
Sub 2 Limiteds exchangeable Ordinary Class B Shares,
which are exchangeable into shares of our common stock, and
(d) any other shares of our capital stock or such
exchangeable stock they acquire after the date of the share
exchange agreement, in exchange for ordinary shares of Man at an
exchange ratio of 1.0856 ordinary shares of Man per share of our
common stock exchanged by the Selling Stockholders (which ratio
may be reduced prior to closing under certain circumstances). We
refer to the shares subject to the share exchange agreement as
the Subject Shares.
However, the Subject Shares will not include any shares of our
common stock issued to a Selling Stockholder upon conversion of
our 5.00% dollar-denominated convertible subordinated notes due
May 15, 2014, and any shares of our common stock acquired
by a Selling Stockholder in the open market prior to the date of
the share exchange agreement. Before completion of the share
exchange and the other transactions contemplated by the share
exchange agreement, a number of closing conditions must be
satisfied or waived.
Following the consummation of the share exchange, as holders of
Man ordinary shares, the Selling Stockholders will be entitled
to receive dividends declared and paid by Man; for example, the
Man board intends to recommend a dividend of at least 22 cents
per Man ordinary share in its fiscal year ending March 31,
2011.
The Share Exchange Agreement is described more fully below under
Descriptions of Other Transaction Agreements
Share Exchange Agreement.
Voting
and Support Agreement
Under the voting and support agreement, the Selling Stockholders
and TOMS have agreed with Man and Merger Sub to vote or cause to
be voted all of the shares of our common stock and preferred
stock held by them as of the date of the voting and support
agreement and acquired after such date, at any meeting of our
stockholders (or any adjournment thereof) or upon any action by
written consent in lieu of a meeting:
|
|
|
|
|
in favor of the Merger Proposal;
|
|
|
|
against any alternative takeover proposal involving 15% or more
of our consolidated assets or to which 15% or more of our
revenues or earnings on a consolidated basis are attributable,
acquisition of beneficial ownership of 15% or more of our
outstanding common stock, a tender offer or exchange offer that
if consummated would result in any third party owning 15% or
more of our outstanding common stock or merger, consolidation,
share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving us, in
each case other than the merger agreement, the transactions
contemplated by the merger agreement, the voting and support
agreement and the share exchange agreement; and
|
|
|
|
against any agreement (including, without limitation, any
amendment of any agreement), amendment of our organizational
documents or other action that is intended or could reasonably
be expected to prevent, impede, interfere with, delay, postpone
or discourage the consummation of the merger.
|
The Voting and Support Agreement is more fully described below
under Descriptions of Other Transaction
Agreements Voting and Support Agreement.
The
Individual Principals Agreements with Man
The following is a summary of the material terms and
provisions of the employment and service agreements expected to
be entered into by Man entities with each of Noam Gottesman,
Emmanuel Roman and Pierre Lagrange.
Employment
and Service Agreements
Noam Gottesman will enter into an employment agreement with one
or more Man entities and Emmanuel Roman and Pierre Lagrange will
both enter into service agreements with one or more Man entities
effective as of the closing of the share exchange. Under the
terms of the each of the agreements, each Individual Principal
will receive an annual base salary of $1,000,000, employee
benefits including, but not limited to reimbursement of
reasonable
75
business expenses, 30 paid vacation days per year, and health,
life and disability insurance coverage, and, in the case of
Mr. Roman and Mr. Lagrange only, participation in the
Man Group Personal Pension Plan without any employer
contribution. Under the terms of the agreements,
Mr. Gottesman will be the Co-Chief Executive Officer of the
GLG business, Mr. Lagrange will be the Senior Managing
Director of the GLG business, and Mr. Roman will be the
Co-Chief Executive Officer of the GLG business and the Chief
Operating Officer of Man.
In addition, each of the agreements provide that either the
Individual Principal or the Man employer entity may terminate
such Individual Principals employment by giving the other
party 12 months advance written notice. The relevant
Man employer entity may, in its discretion, provide such
Individual Principal with payment of severance in lieu of
notice, such that it shall make payment in respect of the
Individual Principals base salary for any unexpired part
of the notice period to which he is entitled. No notice or
severance in lieu of notice is required in the event of a
termination of employment for any reason set forth in the
summary termination section of the agreements and, in the case
of Noam Gottesman, a termination due to death or disability. The
agreements will include restrictive covenants granted by each
executive in favor of Man.
Restrictive
Covenant Agreements
On May 17, 2010, Noam Gottesman entered into a
non-competition and non-solicitation agreement and Emmanuel
Roman and Pierre Lagrange entered into deeds of vendor covenant
with GLG and Man, in each case, contingent on the closing of the
transactions contemplated by the merger agreement and share
exchange agreement.
Under the terms of the respective agreements, each of the
Individual Principals has agreed to be bound by certain
restrictive covenants relating to competition with GLGs
business or solicitation of GLGs employees and directors
beginning on the date of the closing of the share exchange and
ending on the third anniversary of such date in exchange for a
$100,000 payment (payable within 14 days after the date of
the closing of the share exchange). During this period, each
Individual Principal will not alone, or jointly, directly or
indirectly own, be employed or engaged by or in, or otherwise
assist or have any stake or interest in, any business that is
carried on in competition with the Business (as
defined below under Descriptions of Other Transaction
Agreements Restrictive Covenant Agreements)
anywhere within the United States, England, Scotland, Wales and
Northern Ireland, the Cayman Islands, and any other country or
territory in which any GLG Entity (as defined below under
Descriptions of Other Transaction Agreements
Restrictive Covenant Agreements) had material operations
as of the date of the closing of the share exchange. However,
the Individual Principals are permitted to be shareholders or
equity owners of not more than 3% of the shares of any company
whose shares are quoted on any recognized investment exchange.
Additionally, the Individual Principals have agreed not to,
either alone or jointly, directly or indirectly in connection
with the carrying on of any business that is in competition with
the Business, engage in certain other actions that are described
below under Descriptions of Other Transaction
Agreements Restrictive Covenant Agreements.
The Restrictive Covenant Agreements are described more fully
below under Descriptions of Other Transaction
Agreements Restrictive Covenant Agreements.
A
Portion of Our 5.00% Dollar-Denominated Convertible Subordinated
Notes are Held by the Principals
As of June 21, 2010, the following Principals held our
convertible notes:
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$10 million aggregate principal amount of our convertibles
notes, held by TOMS, an affiliate of the Gottesman GLG Trust
established for the benefit of beneficiaries of such trust,
which are convertible into 2,688,172 shares of our common
stock.
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$15 million aggregate principal amount of our convertibles
notes, held by Point Pleasant Ventures Ltd., an affiliate of the
Lagrange GLG Trust established for the benefit of beneficiaries
of such trust, which are convertible into 4,032,258 shares
of our common stock.
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$5 million aggregate principal amount of our convertibles
notes, held by Jackson Holding Services Inc., an affiliate of
the Roman GLG Trust established for the benefit of beneficiaries
of such trust, which are convertible into 1,344,086 shares
of our common stock.
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76
The convertible notes (and the shares of our common stock
issuable upon conversion thereof) are not subject to the share
exchange agreement. If the convertible notes are surrendered for
conversion prior to the merger, they would be converted into
shares of GLG common stock, and would be entitled to the right
to receive $4.50 in cash per share upon the completion of the
merger. If the convertible notes are surrendered for conversion
after the completion of the merger, they will be converted into
an amount of cash equal to $4.50 for each share of GLG common
stock that the convertible notes were convertible into
immediately prior to the merger. However, if the convertible
notes are surrendered for conversion during a specified period
following the completion of the merger, then holders would also
be entitled to a make-whole premium of approximately $90 to $95
per $1,000 principal amount of the convertible notes held by
such holders.
Share
Lock-Up
All of the ordinary shares of Man to be received by the
Principals in the share exchange will be subject to a Share
Lock-Up Deed
of Trust, pursuant to which such Man ordinary shares are
restricted from being disposed of for a period of three years
from the date of the consummation of the merger, subject to the
right to dispose of up to one-third of such Man ordinary shares
after the second anniversary of the consummation of the merger
and other exceptions for covering tax obligations and/or other
tax and estate planning purposes. The ordinary shares of Man
received by Sage Summit and Lavender Heights Capital or their
respective permitted transferees will not be subject to a
lock-up but
will continue to be subject to the same vesting and other terms
and conditions which were applicable to the GLG shares
immediately prior to the share exchange.
Warrant
Tender Offer
GLG has agreed to, and to cause our subsidiaries to, use
reasonable best efforts to commence, prior to the closing date,
offers to purchase all of the outstanding warrants to purchase
GLG common stock at a purchase price of $0.129 per warrant, net
to the seller in cash, without interest thereon, for a total
purchase price of $7,016,913.33, upon the terms and subject to
the conditions to be set forth in the offer to purchase. On
May 14, 2010, the closing price of our publicly traded
warrants was $0.129. The offer will be conditioned upon
completion of the merger. Man agreed to reimburse us for costs
incurred in connection with the Warrant offers and to indemnify
us and our subsidiaries from claims, losses and damages arising
in connection with the Warrant offers.
As of September 1, 2010, we have 54,394,677 issued and
outstanding warrants, each of which represents the right to
purchase one share of GLG common stock at an exercise price of
$7.50 per share. Upon completion of the merger, each warrant
would represent the right to receive $4.50 per share upon
exercise. Accordingly, all of the warrants, whether exercisable
or not, are
out-of-the-money
and will have no economic value after the merger. Certain of the
warrants held by certain of our directors are not publicly
traded. Although our publicly traded warrants are listed on the
New York Stock Exchange, they are not actively traded. The offer
will provide all of the warrant holders with an opportunity to
obtain liquidity that will not be available after the merger.
All warrants tendered in the offer will no longer be outstanding
and will be cancelled by GLG.
Ian Ashken, Martin Franklin, James N. Hauslein and William P.
Lauder currently beneficially own, directly or through
affiliates, 2,134,640, 8,538,560, 51,201 and 51,201 of our
warrants, respectively, and if they elect to tender any of their
warrants under the tender offer, they will be entitled to
receive cash consideration of $0.129 per warrant.
FA Sub
2 Exchangeable Share Dividend Rights
As holders of FA Sub 2 exchangeable shares, Noam Gottesman and
the Gottesman GLG Trust receive a cumulative dividend based on
GLGs estimate of the net taxable income of FA Sub 2
allocable to such holders multiplied by an assumed tax rate.
Upon the exchange of the FA Sub 2 exchangeable shares for Man
ordinary shares at the effective time, such right to receive
such cumulative dividend will terminate.
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Treatment
of Awards Under the Restricted Stock Plan, 2007 Long Term
Incentive Plan, 2009 Long Term Incentive Plan and the Equity
Participation Plan
At the effective time of the merger, each issued and outstanding
share of restricted common stock of GLG issued under GLGs
stock and incentive plans will be converted into the right to
receive $4.50 in cash, without interest, the receipt of which
will be (except in the case of restricted shares held by our
non-employee directors) subject to the same vesting terms and
conditions and other rights and restrictions that were
applicable to such shares of restricted common stock prior to
the effective time.
At the effective time of the merger, each outstanding award
under GLGs stock and incentive plans representing a right
to receive shares of common stock of GLG (other than shares of
restricted common stock) will be settled in ordinary shares of
Man, in an amount equal to the number of shares underlying such
stock rights multiplied by the exchange ratio set forth in the
share exchange agreement, or if our representation in the merger
agreement that each holder of such stock rights is a
non-U.S. resident
is not correct or if the assumption of the stock rights by the
surviving corporation is prohibited by applicable securities
laws, then such stock rights will instead be converted at the
effective time into a right to receive $4.50 in cash, without
interest, multiplied by the number of shares covered by such
stock rights. In either case, the ordinary shares of Man or the
cash amount will be subject to the same vesting and other terms
and conditions that were applicable to such stock rights prior
to the effective time.
At the effective time of the merger, all outstanding restricted
stock awards held by our non-employee directors will be
converted into the right to receive $4.50 per share and the
vesting of such right will be accelerated to the effective time.
The following sets forth all unvested restricted stock awards
held by our executive officers and non-employee directors and
the trustee of the Gottesman GLG Trust as of September 13,
2010.
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Value of Unvested
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Restricted Share Awards
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Aggregate Number of
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(Based on Merger
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Unvested Restricted
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Consideration of $4.50
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Name
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Stock Awards
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per Share)
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Alejandro San Miguel
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276,253
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$
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1,243,139
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Jeffrey M. Rojek
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267,820
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1,205,190
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Simon White
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27,133
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122,099
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Martin E. Franklin
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244,788
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1,101,546
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Ian G.H. Ashken
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48,860
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219,870
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James N. Hauslein
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40,717
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183,227
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William P. Lauder
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40,717
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183,227
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Leslie J. Schreyer
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402,831
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1,812,740
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In recognition of his contributions in connection with the
restructuring of GLGs credit facility and the issuance of
GLGs convertible notes in May 2009, Mr. Franklin
received an award of 300,000 restricted shares of GLG common
stock under GLGs 2009 Long-Term Incentive Plan. Because
Mr. Franklin received this award of restricted shares
outside of his capacity as a director, he was no longer
considered an independent director as defined in
Section 303A.02 of the New York Stock Exchange Listed
Company Manual.
In addition, Mr. White participates in the limited partner
profit share arrangement and equity participation plan for
GLGs key personnel. Under this arrangement, Mr. White
has direct or indirect profits interests in certain GLG
entities, which entitles Mr. White to receive distributions
of profits derived from the fees earned by these GLG entities.
Mr. White received an allocation of the equity
participation plan on November 2, 2007 of
440,000 shares of our common stock and $2 million in
cash. Of these allocations to Mr. White,
110,000 shares of GLG common stock and $500,000 in cash
remain unvested and are scheduled to vest on November 2,
2010. In February 2010, Mr. White received additional
limited partnership interests in Sage Summit LP representing the
right to receive 100,000 shares of our common stock as a
portion of his annual bonus compensation for 2009, which shares
will vest in three equal installments on March 31, 2011,
2012 and 2013. See The Merger Agreement
Treatment of Equity Awards.
78
Directors
and Officers Insurance
The merger agreement provides that for six years from the
effective time of the merger, Man and the surviving corporation
must maintain in effect GLGs current directors and
officers liability insurance covering acts or omissions
occurring at or prior to the effective time of the merger of
those persons who are currently covered by our directors
and officers liability insurance policy. Alternatively,
Man may maintain in effect for six years from the effective time
of the merger directors and officers insurance with
benefits and levels of coverage at least as favorable as
provided in our existing policies; provided, that the aggregate
annual premium for such insurance does not exceed 300% of the
current annual premium. In lieu of the foregoing, GLG may obtain
directors and officers insurance tail policies
applicable for the period of six years commencing at the
effective time of the merger and ending on the sixth year
anniversary of the effective time of the merger providing at
least the same coverage with respect to amounts, scope, terms
and conditions as the current directors and officers
insurance; provided, that the aggregate annual premium for such
insurance does not exceed 300% of the current annual premium.
Indemnification will continue to be provided by Man and the
surviving corporation in the merger to GLGs current and
former officers and directors. See The Merger
Agreement Indemnification and Insurance.
Amendments
to Certain Employment Agreements with GLG
On May 16, 2010, the Compensation Committee approved
certain amendments to the employment agreements for Jeffrey M.
Rojek, Alejandro R. San Miguel, Simon White and Leslie J.
Schreyer. These amendments further amended the employment
agreements of Messrs. Rojek, San Miguel and White
which had been amended in March 2010 in order to better align
with each other the terms and conditions of such employment
agreements. The March 2010 amendments were authorized by the GLG
Board in December 2009, prior to significant and substantive
discussions with Man regarding a potential transaction which
began in February 2010.
Due to the conditionality of the proposed transaction and the
potentially extended pre-closing period, these retention and
severance arrangements would provide protection for the key
personnel critical to implement certain steps necessary for a
transaction to reach a conclusion, without concern that their
decisions and actions made in the interest of the Company would
put at risk their financial situation immediately after
completion of the transaction. These arrangements would also
incentivize the key personnel to remain focused on the Company
and its business and not on seeking other employment.
The May 2010 amendments provide the following enhanced benefits
to Messrs. Rojek, San Miguel and Schreyer (described
in more detail below): (i) for Mr. San Miguel,
enhancements of his existing change of control severance
benefits, including changing the formula for the severance
payment to two times his average annual compensation over a
specified number of prior years (capped at $5 million);
(ii) for Messrs. Rojek and Schreyer, additions of
change of control severance benefits, including a payment equal
to two times the individuals average annual compensation
over a specified number of prior years (capped at
$3 million and $4 million for Messrs. Rojek and
Schreyer, respectively) and the vesting of outstanding equity
awards; (iii) an expanded change of control trigger which
includes a potential change of control (i.e., the
pendency of a transaction that would constitute a change of
control if consummated); (iv) expanded termination
situations under which severance is payable which include death
or disability following a change of control or during the
pendency of a potential change of control, provided that a
change of control transaction is ultimately consummated;
(v) payment or reimbursement of excise tax imposed on
severance payments in excess of specified limits under
Sections 280G and 4999 of the Internal Revenue Code;
(vi) for Mr. Schreyer, addition of a cause
definition; (vii) expansion of the good reason
definition for Mr. San Miguel to include a voluntary
resignation for any reason during the one-year period following
a change of control and addition of a similar good
reason definition and corresponding severance payment
provision for Messrs. Rojek and Schreyer who did not
previously have them; (viii) for Mr. San Miguel,
removal of GLGs ability to consider limitations on the
deductibility of his minimum annual bonus payment in setting his
annual bonus; and (ix) providing that bonus payments will
be paid no later than December 31 of the calendar year in which
the bonus is earned.
For Mr. White, the May 2010 amendments amended his existing
severance arrangement to provide an enhanced change of control
payment of $1.5 million for a termination without cause or
for good reason in lieu of any other severance amounts under the
agreement, subject to the enhanced severance benefits expiring
in the event a change of control does not occur before
December 31, 2010. In addition, on May 16, 2010,
Mr. White was allocated interests in shares of GLG common
stock as a limited partner in each of Sage Summit LP and
Lavender Heights
79
Capital LP, in the amounts of 164,288 shares and
131,747 shares, respectively. The share allocations will
vest and be distributed to Mr. White on the later of
November 2, 2010 or the date of a change of control,
provided the additional share allocations will be forfeited if a
change of control does not occur on or before December 31,
2010, or certain termination events related to
Mr. Whites employment with GLG have occurred prior to
the distribution to Mr. White of the additional share
allocations.
The estimated aggregate amount of cash severance payments to
Messrs. Rojek, San Miguel, White and Schreyer would be
approximately $13.5 million, assuming termination of
employment immediately after the consummation of the merger
(other than for cause). This estimate excludes (a) any
prorated discretionary bonus amounts that may be paid with
respect to services rendered prior to the consummation of the
merger and (b) an estimated amount up to approximately
$5.3 million, depending on whether and to what extent
payment or reimbursement of excise tax imposed on severance
benefits under Sections 280G and 4999 of the Internal
Revenue Code would be applicable. The amount and extent of the
excise tax imposed on severance benefits will depend on factors
such as the actual closing date of the merger, applicable
federal rates on the closing date of the merger, what
constitutes reasonable compensation, and the value ascribed to
each employees non-competition provisions.
Additionally, in accordance with each employment agreement, upon
termination of employment immediately after consummation of the
merger (other than for cause), all unvested restricted shares
will vest. The aggregate value of all unvested shares is
approximately $6.7 million. Of this amount,
$4.6 million relates to shares which would have otherwise
vested on November 2, 2010, irrespective of the merger, and
the remaining amount relates to shares which would have vested
after November 2, 2010.
Jeffrey
M. Rojek
On May 16, 2010, with effect from January 1, 2010, we
entered into an amended and restated employment agreement with
Mr. Rojek. Pursuant to his employment agreement with us,
Mr. Rojek has served as our Chief Financial Officer since
March 18, 2008 and receives: an annual salary of $400,000;
an annual bonus equal to at least $600,000; and other benefits
as set forth in the employment agreement, including
reimbursement of reasonable business expenses and eligibility to
participate in employee benefit plans. Mr. Rojek is also
eligible to receive a discretionary bonus and to receive equity
incentive awards under the 2009 Long Term Incentive Plan.
Mr. Rojeks employment agreement has a term of one
year and will automatically renew for additional one-year
periods absent an election by Mr. Rojek or GLG not to renew
by written notice provided at least six months prior to the end
of the term of the agreement or unless terminated earlier in
accordance with the agreement. Mr. Rojeks employment
agreement contains post-employment covenants related to
confidentiality, non-competition, non-dealing and
non-solicitation/no-hire. His non-competition covenant extends
for twelve months following termination of employment. His
non-dealing and non-solicitation/no-hire covenants cover clients
and employees, and extend for six, twelve or eighteen months
following termination of employment.
In addition, Mr. Rojeks employment agreement provides
that, in the event of the termination of his employment GLG
without cause upon six months written notice, or a non-renewal
of his employment, he will be entitled to the following:
(i) his annual bonus and any awarded discretionary bonus
for the prior year, to the extent it has not already been paid
to him; (ii) a pro rata portion of his annual bonus for the
year in which his employment is terminated; (iii) 50% of
his annual base salary; (iv) 50% of his minimum annual
bonus; and (v) two years of continued coverage under
GLGs health insurance plan. Alternatively, in lieu of
providing him with six months advance written notice, GLG may
elect to terminate Mr. Rojeks employment without
cause at any time and with immediate effect by paying
Mr. Rojek the sum of 100% of his annual base salary, 100%
of his minimum annual bonus, and the amounts set forth in
clauses (i) and (ii) above.
Mr. Rojeks employment agreement further provides
that, in the event of a termination of his employment without
cause or for good reason (each as defined in the employment
agreement) following a change of control or during a potential
change of control (each as defined below), or in the event of a
termination of Mr. Rojeks employment for death or
disability within one year of a change of control or during a
potential change of control which results in a change of
control, he will be entitled to the following: (i) his
annual bonus and any awarded discretionary bonus for the prior
year, to the extent it has not already been paid to him;
(ii) a pro-rata portion of his annual bonus for the year in
which his employment is terminated, and in GLGs
discretion, a discretionary bonus for the year in which his
employment is
80
terminated; (iii) a payment equal to the lesser of
(1) two times the average of Mr. Rojeks total
compensation for 2008 and 2009, as set forth in the
Total column of the Summary Compensation Table
contained in GLGs proxy statement for the 2010 Annual
Meeting of Shareholders, as filed with the SEC, and
(2) $3 million; (iv) two years of continued
coverage under GLGs health insurance plan;
(v) immediate vesting of any outstanding equity incentive
awards, including under the 2007 Long Term Incentive Plan; and
(vi) payment or reimbursement for any federal excise tax
imposed on any parachute payment under Section 4999 of the
Internal Revenue Code and certain additional taxes imposed on or
borne by the employee relating to certain change of control
payments and related tax audit or litigation expenses.
Under Mr. Rojeks employment agreement, a change
of control means the earliest to occur of the following
events:
(1) the acquisition of ownership by any person of
beneficial ownership of GLGs combined voting power in
excess of the greater of (A) 25% of GLGs outstanding
voting securities, or (B) the then outstanding voting
securities beneficially owned by the Individual Principals and
their Trusts (including by their respective families,
partnerships and charitable foundations controlled by any of the
Individual Principals), except for (x) any acquisition by
any employee benefit plan (or related trust) of GLG or a
subsidiary, (y) any acquisition pursuant to the exchange of
Exchangeable Class B Ordinary Shares of FA Sub 2 Limited
for shares of common stock of GLG, or (z) any acquisition
pursuant to a transaction that complies with each of clauses
(x), (y), and (z) of the following paragraph (2); or
(2) GLGs reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of its
assets, or the acquisition of assets of another entity, unless
(x) the beneficial owners of GLGs outstanding voting
securities continue to own more than 50% of the combined voting
power of the resulting corporation, (y) no person (except
any employee benefit plan or related trust of GLG or a
subsidiary) acquires beneficial ownership of voting securities
in excess of the greater of (1) 25% of GLGs
outstanding voting securities or (2) the then outstanding
voting securities beneficially owned by the Individual
Principals and their Trusts (including by their respective
families, partnerships and charitable foundations controlled by
any of the Individual Principals), and (z) at least a
majority of the GLG Board remain the directors of the resulting
corporation; or
(3) a change in the composition of a majority of the board
of directors in office on the start date of the executives
employment with GLG or whose election or nomination was approved
by at least a majority of the directors then comprising the
board of directors as of the start date of the executives
employment with GLG and directors who were so approved by at
least a majority of such directors (the Incumbent
Board); or
(4) approval by GLGs shareholders of a complete
liquidation or dissolution of GLG.
Under Mr. Rojeks employment agreement, a
potential change of control means:
(1) the commencement of a tender or exchange offer by any
third person of GLGs outstanding voting securities in
excess of the greater of (A) 25% of GLGs outstanding
voting securities, or (B) the then outstanding voting
securities beneficially owned by the Individual Principals and
their Trusts (including by their respective families,
partnerships and charitable foundations controlled by any of the
Individual Principals); or
(2) the execution of an agreement by GLG which would result
in the occurrence of a change of control; or
(3) the public announcement by any person of an intention
to take or to consider taking actions that, if consummated,
would constitute a change of control; or
(4) the adoption by the board of directors of GLG of a
resolution to the effect that a potential change of control has
occurred.