Drama-plagued Sculptor Capital already agreed to a sale to Rithm Capital By Gregory Zuckerman Updated Aug. 20, 2023 8:52 pm ET Sculptor Capital Management had previously rejected an offer from Weinstein’s group. PHOTO: GABBY JONES FOR THE WALL STREET JOURNAL Boaz Weinstein and several other high-profile investors including William Ackman and Marc Lasry have made a rival offer for Sculptor Capital Management SCU 5.22%increase; green up pointing triangle, a hedge-fund firm that already agreed to sell itself to another investment firm. In late July, Sculptor agreed to a sale to real-estate investment firm Rithm Capital RITM -0.26%decrease; red down pointing triangle for about $639 million, or $11.15 in cash per Class A share of Sculptor, which formerly was known as Och-Ziff Capital Management. The offer was an 18% premium to Sculptor’s closing price at the time. Should it be completed, the deal would leave Sculptor’s current management, led by Chief Executive James Levin, in place. Weinstein’s group presented an offer for Sculptor that was rejected during the sales process and it subsequently increased its bid to more than $12 a share, people familiar with the matter said. Sculptor shares closed at $11.20 on Friday. If successful, the group likely would install new management, the people said. Weinstein runs Saba Capital Management, while Ackman leads Pershing Square Capital Management and Lasry helms Avenue Capital Group, all prominent New York hedge-fund firms. Financing for their bid for Sculptor is expected to come from their personal money, not their firms’ cash. “We have received an unsolicited proposal from a third party that had participated in the strategic alternatives process,” Sculptor said in a statement. “Though this latest bid’s headline valuation is higher than the Rithm transaction, this proposal only includes committed financing for less than half of the amount required to consummate the transaction. The Weinstein group is confident it has sufficient financing, according to someone close to the matter. Terms of the merger agreement allow Sculptor to terminate its deal with Rithm if a superior offer emerges, though Sculptor could pay the real-estate investment trust a fee of about $16.5 million. Weinstein is best known for profiting in 2012 when bets by a JPMorgan Chase trader nicknamed The London Whale went awry. Ackman, who made his name as a prominent shareholder activist, made complex trades that netted $4 billion as the coronavirus emerged and Lasry is a debt-focused investor who was a co-owner of the Milwaukee Bucks basketball team. It is the latest drama for Sculptor, which manages $34 billion and remains the largest U.S. publicly traded hedge fund. In recent years the firm has gained more attention for the sky-high pay of its chief executive, a bribery scandal and an ugly battle involving its former founder. Launched in 1994 by former Goldman Sachs merger arbitrager Daniel Och with the backing of the Ziff family, Och-Ziff for years enjoyed steady-if-unspectacular returns and soaring assets. The firm’s assets hit $50 billion in 2005 and it went public in 2007, its shares reaching a high of $30.65. In 2012, a credit bet by the then-30-year old Levin—who goes by Jimmy—netted the firm $2 billion in profits. Och first got to know Levin when he taught Och’s son to water ski at summer camp in Wisconsin. By 2017, Levin was in line to succeed Och as chief executive. Over time, though, Och soured on Levin and moved to reassert control of the firm, before eventually leaving, after selecting another CEO. Sculptor’s assets have stagnated over the past decade, partly due to the fallout from accusations that it bribed government officials in Democratic Republic of Congo, Libya and other African countries, charges that the firm settled in 2016, paying $412 million in penalties. Och settled separate civil charges. In recent years, Och, who remains the company’s second-largest shareholder with a 12.5% stake, has criticized Levin’s pay, which amounted to $145.8 million in 2021 and totaled nearly $90 million in 2020 and 2019 combined, according to regulatory filings. Last year, a Sculptor director appointed by Och resigned from the board, alleging governance failures including “staggering” compensation awarded to Levin, a charge the company denied. Last year, Levin made $6.36 million in compensation, according to the filings. When he was running the firm, Och agreed to separate pay packages for Levin worth over $100 million combined. Levin is the firm’s largest shareholder with a stake of nearly 14% and voting power of more than 20%. Last week, Och and some of his former partners wrote to the special committee of the company’s board, expressing his unhappiness with the sale to Rithm, which he said doesn’t reflect the full value of the company.