Litigation » Injunction Hearing Scheduled On Rithm Capital Acquisition of Sculptor

Injunction Hearing Scheduled On Rithm Capital Acquisition of Sculptor

November 13, 2023

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Reuters reports that a preliminary injunction hearing to block Rithm Capital’s $720 million bid for Sculptor Capital Management, a hedge fund, has been scheduled in Delaware Chancery Court on Nov. 14, two days before shareholders vote on the deal.

In October, Sculptor founder Dan Och and an allied group of former Sculptor executives backed Rithm’s offer after it was upped to $720 million. They opposed the expedited injunction.

In a hearing before the Chancery Court, the judge was initially doubtful about the need for a preliminary injunction proceeding. He cited Sculptor’s assertions that the rival Weinstein consortium had opted out.

However, counsel for a special board committee that led negotiations with Rithm told the judge it hadn’t received a response from the consortium of hedge fund managers led by Boaz Weinstein of Saba Capital after the Och group voted its 15 percent for Rithm’s offer of $12.70 per share.

A spokesman for the special committee testified that the Weinstein Group was still a viable rival. He argued that a preliminary injunction hearing can probe whether the Sculptor board is favoring Rithm to the detriment of its shareholders.

Additionally, the October hearing probed a dispute between the Och group and the rest of the Sculptor shareholder class. The shareholders claim that Och breached a fiduciary duty to other shareholders by making a side deal with Rithm.

The complaint the judge amended on behalf of the Sculptor shareholders is sealed. Weinstein confirmed that it includes breach-of-duty claims against the Och group. The judge was quoted as saying he has “real concerns” about the Och group’s conduct.

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